State Street SPDR Portfolio S&P 600 Small Cap ETF (SPSM 0.30%) and Vanguard Small-Cap ETF (VB 0.09%) both target U.S. small-cap stocks, but VB covers a broader slice of the market, holds more companies, and posted higher one-year returns, while SPSM stands out for its lower expense ratio.
Both SPSM and VB offer low-cost, index-based access to U.S. small-cap equities, appealing to investors seeking diversified exposure beyond large caps. This comparison looks at costs, returns, portfolio makeup, and trading practicality to help investors decide which ETF best fits a small-cap allocation.
Snapshot (cost & size)
| Metric | SPSM | VB |
|---|---|---|
| 1-yr return (as of 2026-01-09) | 11.6% | 14.1% |
| Beta | 1.23 | 1.27 |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year weekly returns. The 1-yr return represents total return over the trailing 12 months.
SPSM is more affordable with a 0.03% expense ratio, while VB charges a slightly higher 0.05%. SPSM also offers a marginally higher dividend yield, which may appeal to those seeking a bit more income from their small-cap exposure.
NYSEMKT: VB
Key Data Points
Performance & risk comparison
| Metric | SPSM | VB |
|---|---|---|
| Max drawdown (5 y) | -27.94% | -28.16% |
| Growth of $1,000 over 5 years | $1,290 | $1,334 |
What's inside
VB tracks a broad small-cap index, holding 1,357 stocks with a tilt toward industrials (19%), technology (17%), and healthcare (13%). Its top positions as of Jan. 2026 are Insmed (INSM +1.35%), Comfort Systems USA (FIX +2.73%), and SoFi Technologies (SOFI 1.17%), each making up less than 1% of assets. With 22 years on the market and over $163 billion in assets under management (AUM), VB offers scale and breadth, aiming to fully replicate its index.
SPSM, meanwhile, holds 607 companies and emphasizes financial services (18%), industrials (16%), and technology (15%). Its largest positions are Arrowhead Pharmaceuticals (ARWR 3.64%), LKQ Corp (LKQ 1.14%), and Armstrong World Industries (AWI 0.19%), all below 0.6% of assets. Both ETFs avoid leverage, hedging, or thematic screens, but SPSM’s narrower focus on the S&P SmallCap 600 may result in subtle differences in risk and sector mix.
NYSEMKT: SPSM
Key Data Points
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What this means for investors
Small-cap stocks are typically defined as companies with market capitalizations below $2 billion. They offer investors exciting high-growth potential but they also come with elevated volatility. Both of these ETFs offer diversified access to this space at a similar price, but differ in their size and approach.
Because VB tracks the CRSP US Small Cap Index with around 1,300 holdings, it casts a wider net across smaller companies. Its 0.05% expense ratio and $163 billion in assets make it one of the largest small-cap funds available. That size means tighter bid-ask spreads and easier trading for investors. SPSM follows the S&P SmallCap 600 with roughly 600 stocks and an ultra-low 0.03% expense ratio, appealing to cost-conscious investors despite its smaller $13 billion asset base.
Both funds favor industrials and technology, but have some differences in their sector allocations and top holdings. VB leans a bit more heavily into industrials, while SPSM allocates more to financials. Choose VB if you want maximum diversification across the small-cap universe and don't mind paying slightly more. Opt for SPSM if you prefer a tighter portfolio of 600 established small caps at rock-bottom cost, though small-cap volatility means both ETFs require a tolerance for market swings.
Glossary
ETF: Exchange-traded fund that holds a basket of securities and trades on an exchange like a stock.
Index-based: Investment strategy that seeks to replicate the performance of a specific market index, not beat it.
Expense ratio: Annual fund operating costs expressed as a percentage of the fund's average assets.
Dividend yield: Annual dividends per share divided by the current share price, shown as a percentage.
Beta: Measure of an investment’s volatility relative to the overall market, typically compared with the S&P 500.
AUM: Assets under management; the total market value of all assets a fund manages.
Total return: Investment return including price changes plus all dividends and distributions, assuming reinvestment.
Max drawdown: Largest peak-to-trough decline in an investment’s value over a specific period.
Small-cap: Companies with relatively small market capitalizations, generally offering higher growth potential and higher risk.
Sector weight: Percentage of a portfolio’s assets invested in a particular industry or sector.
Replication: Method where a fund holds the same securities as its index, in similar proportions.
Leverage: Use of borrowed money or derivatives to increase exposure beyond the fund’s net assets.
