If you’re interested in broad exposure to the Small Cap Blend segment of the US equity market, look no further than the SPDR Portfolio S&P 600 Small Cap ETF (SPSM), a passively managed exchange traded fund launched on 07/08/2013.
The fund is sponsored by State Street Global Advisors. It has amassed assets over $10.36 billion, making it one of the largest ETFs attempting to match the Small Cap Blend segment of the US equity market.
Why Small Cap Blend
There’s a lot of potential to investing in small cap companies, but with market capitalization below $2 billion, that high potential comes with even higher risk.
Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.
Costs
Investors should also pay attention to an ETF’s expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.03%, making it the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.62%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Industrials sector–about 18.30% of the portfolio. Financials and Consumer Discretionary round out the top three.
Looking at individual holdings, Elf Beauty Inc (ELF) accounts for about 0.69% of total assets, followed by Rambus Inc (RMBS) and Comfort Systems Usa Inc (FIX).
The top 10 holdings account for about 5.94% of total assets under management.
Performance and Risk
SPSM seeks to match the performance of the Russell 2000 Index before fees and expenses. The S&P SmallCap 600 Index is designed to measure the performance of the small-capitalization segment of the U.S. equity market.
The ETF has added roughly 1.10% so far this year and it’s up approximately 15.73% in the last one year (as of 03/22/2024). In the past 52-week period, it has traded between $34.30 and $42.83.
The ETF has a beta of 1.12 and standard deviation of 21.92% for the trailing three-year period. With about 612 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR Portfolio S&P 600 Small Cap ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, SPSM is an excellent option for investors seeking exposure to the Style Box – Small Cap Blend segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Russell 2000 ETF (IWM) and the iShares Core S&P Small-Cap ETF (IJR) track a similar index. While iShares Russell 2000 ETF has $63.03 billion in assets, iShares Core S&P Small-Cap ETF has $79.07 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.
Bottom-Line
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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SPDR Portfolio S&P 600 Small Cap ETF (SPSM): ETF Research Reports
Rambus, Inc. (RMBS) : Free Stock Analysis Report
Comfort Systems USA, Inc. (FIX) : Free Stock Analysis Report
iShares Russell 2000 ETF (IWM): ETF Research Reports
iShares Core S&P Small-Cap ETF (IJR): ETF Research Reports
e.l.f. Beauty (ELF) : Free Stock Analysis Report
