The Schwab U.S. Small-Cap ETF (NYSEMKT:SCHA) and iShares Morningstar Small-Cap ETF (NYSEMKT:ISCB) both offer broad, low-cost exposure to U.S. small-cap stocks, but differ in fund size, sector tilts, and liquidity.
Both SCHA and ISCB aim to capture the performance of the U.S. small-cap equity market, making them potential core holdings for investors seeking diversification beyond large caps. This comparison looks at how these two funds stack up across cost, size, sector exposure, recent returns, and practical factors such as liquidity.
NYSEMKT: SCHA
Key Data Points
Snapshot (cost & size)
| Metric | SCHA | ISCB |
|---|---|---|
| Issuer | Schwab | IShares |
| Expense ratio | 0.04% | 0.04% |
| 1-yr return (as of 2026-03-11) | 26.9% | 23.0% |
| Dividend yield | 1.2% | 1.4% |
| Beta | 1.30 | 1.25 |
| AUM | $19.5 billion | $245.9 million |
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.
Both funds are among the most affordable small-cap ETFs, but ISCB offers a slightly higher dividend yield. SCHA’s much larger assets under management (AUM) and higher liquidity may appeal to those prioritizing ease of trading.
Performance & risk comparison
| Metric | SCHA | ISCB |
|---|---|---|
| Max drawdown (5 y) | -30.8% | -29.9% |
| Growth of $1,000 over 5 years | $1,170 | $1,177 |
What's inside
ISCB tracks a Morningstar index, holding 1,560 U.S. small-cap stocks with a bias toward industrials (19%), financials (17%), and healthcare (14%). Its largest positions, such as Lumentum Holdings (LITE +4.47%), Ati (ATI +0.04%), and Albemarle (ALB 2.14%) each accounts for less than 1% of assets, keeping the concentration low. The fund has a long track record, with over 21 years in the market.
NYSEMKT: ISCB
Key Data Points
SCHA, by contrast, holds over 1,700 stocks. Its largest sector allocations are financials (18%) and industrials (17%), but it has a higher weighting in technology (15%). Its top holdings include Sandisk (SNDK +2.67%), Lumentum Holdings, and Ati, with none dominating the portfolio. Both funds avoid leverage, currency hedges, or ESG screens, so exposures are broad and plain-vanilla.
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What this means for investors
Neither fund offers an advantage in terms of costs, returns, or dividend yield. There are minor differences in these metrics. The key difference that would tilt an investor toward SCHA over ISCB is its larger size and liquidity, and a slightly greater weighting in technology small-caps.
Technology is an important area because that is where much of the innovation in the economy is happening, and it’s been that way for decades now. Tech stocks have significantly outperformed the broader market over the past 20 years.
ISCB is still a solid fund, as evidenced by its low expense ratio, diversified portfolio, and return history similar to SCHA. But if you want a more balanced weighting across industrials, financials, healthcare, and technology, SCHA is the better small-cap fund.
