SCHA vs. SPSM: Which Small-Cap ETF Is the Better Choice for Investors?

Core Insights - The article compares two small-cap ETFs: State Street SPDR Portfolio S&P 600 Small Cap ETF (SPSM) and Schwab U.S. Small-Cap ETF (SCHA), focusing on their costs, performance, risk, and portfolio composition [2] Cost & Size Comparison - SPSM has a lower expense ratio of 0.03% compared to SCHA's 0.04% - SPSM's one-year return is 5.32%, while SCHA's is significantly higher at 11.33% - SPSM offers a dividend yield of 1.70%, which is higher than SCHA's 1.38% - SPSM has an AUM of $13 billion, whereas SCHA has $19 billion [3][4] Performance & Risk Comparison - SPSM's maximum drawdown over five years is -27.95%, while SCHA's is deeper at -30.79% - The growth of $1,000 invested over five years is $1,322 for SPSM and $1,294 for SCHA [5] Portfolio Composition - SCHA tracks the Dow Jones U.S. Small-Cap Total Stock Market Index and holds 1,745 stocks, providing greater diversification - SPSM tracks the S&P SmallCap 600 Index and contains 607 stocks, with significant allocations in financial services, industrials, and technology [6][7] - SCHA's top holdings include Sandisk, Lumentum Holdings, and Rocket Companies, while SPSM's largest holdings are Arrowhead Pharmaceuticals, Armstrong World Industries, and InterDigital [7][8] Investment Implications - Investing in small-cap stocks can enhance portfolio diversification and exposure to growth potential - SCHA has shown higher volatility with a higher beta and a more severe maximum drawdown, despite outperforming SPSM in the past year [10]