Finance
Schwab Small Cap ETF Tops State Street in Returns and Diversification
The Schwab U.S. Small-Cap ETF (NYSEMKT:SCHA) offers broader diversification across more than 1,700 holdings, while the State Street SPDR Portfolio S&P 600 Small Cap ETF (NYSEMKT:SPSM) provides a leaner portfolio with slightly lower costs.
Both funds target the small-cap segment of the U.S. equity market but follow different index strategies. While the State Street fund focuses on the S&P SmallCap 600, the Schwab fund tracks the Dow Jones U.S. Small-Cap Total Stock Market Index, leading to differences in concentration and volatility.
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
Compare how expense ratios, yield, and portfolio breadth set these two small-cap ETFs apart in risk and income profile.
The Schwab U.S. Small-Cap ETF (SCHA 0.56%) offers broader diversification across more than 1,700 holdings, while the State Street SPDR Portfolio S&P 600 Small Cap ETF (SPSM 0.61%) provides a leaner portfolio with slightly lower costs.
Both funds target the small-cap segment of the U.S. equity market but follow different index strategies. While the State Street fund focuses on the S&P SmallCap 600, the Schwab fund tracks the Dow Jones U.S. Small-Cap Total Stock Market Index, leading to differences in concentration and volatility.
Snapshot (cost & size)
| Metric | SPSM | SCHA |
|---|---|---|
| Issuer | SPDR | Schwab |
| Expense ratio | 0.03% | 0.04% |
| 1-yr return (as of April 27, 2026) | 38.70% | 44.10% |
| Dividend yield | 1.50% | 1.10% |
| Beta | 1.04 | 1.10 |
| AUM | $15.2 billion | $22.0 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
The State Street fund is slightly more affordable with an expense ratio of 0.03%. Investors focused on income may also prefer its higher payout, as it offers a 1.50% trailing-12-month distribution yield compared to 1.10% for its peer.
SPDR Series Trust – State Street SPDR Portfolio S&P 600tm Small Cap ETF
Today’s Change
(-0.61%) $-0.32
Current Price
$52.51
Performance & risk comparison
| Metric | SPSM | SCHA |
|---|---|---|
| Max drawdown (5 yr) | (27.90%) | (30.80%) |
| Growth of $1,000 over 5 years (total return) | $1,324 | $1,334 |
The Schwab U.S. Small-Cap ETF focuses on the broader small-cap market, with sectors led by Technology at 18.00%, Financial Services at 16.00%, and Industrials at 16.00%. Its 1,728 holdings include large positions in SanDisk (SNDK +9.03%) at 3.23%, Lumentum Holdings (LITE +8.04%) at 1.39%, and Revolution Medicines (RVMD 1.92%) at 0.59%. This fund was launched in 2009, has ~$22.0 billion in assets under management (AUM), and has a trailing-12-month dividend of $0.34 per share.
In contrast, the State Street SPDR Portfolio S&P 600 Small Cap ETF targets a more concentrated group of 607 holdings. Its sector exposure tilts toward Industrials at 17.00%, Financial Services at 17.00%, and Technology at 16.00%, with top holdings including FormFactor (FORM +0.72%) at 0.61%, Viavi Solutions (VIAV +5.91%) at 0.58%, and Semtech (SMTC +3.02%) at 0.58%. The State Street fund was launched in 2013, manages ~$15.2 billion in AUM, and paid $0.77 per share over the trailing 12 months.
For more guidance on ETF investing, check out the full guide at this link.
Schwab Strategic Trust – Schwab U.s. Small-Cap ETF
Today’s Change
(-0.56%) $-0.18
Current Price
$31.80
What this means for investors
Small-cap stocks — companies too small to crack the S&P 500 — have historically outperformed large caps over long time horizons, but with a catch: The small-cap universe is littered with unprofitable, speculative companies that can drag returns down significantly. How a fund handles that reality is often what separates good small-cap exposure from great small-cap exposure.
SCHA takes the broadest possible approach, tracking roughly 1,700 small-cap stocks with no filter for profitability. If a company is small enough, it’s in. SPSM is more selective, tracking the S&P SmallCap 600, which requires companies to demonstrate profitability before gaining admission. That quality gate has historically helped the S&P 600 avoid some of the worst small-cap blowups.
The real choice is philosophical: maximum breadth or a quality screen that weeds out the weakest names before they land in your portfolio. Investors who believe in owning the entire small-cap market — profitable or not — will find SCHA the purer expression of that conviction. Those who want small-cap exposure with a built-in layer of quality control will find SPSM the more disciplined choice.