IShares Core S&P Small-Cap ETF and iShares S&P SmallCap 600 ETF’s low fee, broad diversification, and profitability bias make them hard to beat. Both the U.S. and Ireland-domiciled strategies earn Morningstar Medalist Ratings of Silver.
These funds track the S&P SmallCap 600 Index, which collects the smallest 600 stocks in the S&P 1500 composite index. Each constituent must meet initial market cap, liquidity, and profitability criteria to be eligible. The final portfolio is weighted by each stock’s float-adjusted market capitalization. 
Market-cap weighting is an efficient way to allocate the portfolio because it harnesses the market’s consensus opinion of each stock’s relative value. Faster-growing companies take up a larger share of the portfolio, while smaller companies that may be struggling take on a less-important role. This helps rein in turnover and associated trading costs.
The S&P SmallCap 600 Index operates on the smaller end of the small-cap market. Its average holding size was just over $2 billion as of April 2023, which is smaller than most index competitors. Small-cap stocks tend to be more volatile than their larger peers. However, the fund’s parent index only includes profitable names, which removes the lowest-quality small-cap stocks and contains volatility.
While the smaller names that constitute this portfolio can be volatile, the strategy’s broad reach ensures that one stock’s misfortune should not derail the entire portfolio. It stashes just 6% of assets in its top 10 holdings. That breadth helped the S&P SmallCap 600 Index return a sturdy 9.6% annually in the 10 years through April 2023. Each fund earned slightly less than that owing to its respective fee.

Analyst Rating

Controls risk in the U.S. small-cap market.

Associate Analyst

Zachary Evens

Civitas Resources

Comfort Systems USA

SPS Commerce

e.l.f. Beauty

Rambus

Onto Innovation

Applied Industrial Technologies

Allegheny Technologies

Fabrinet

Axcelis Technologies

A preference for profitable firms and sound diversification should minimize the risks of the strategy's smaller orientation. It earns an Above Average Process Pillar rating.

Above Average

Process

BlackRock’s industry-leading technology, global footprint, and extensive supporting cast earn an Above Average People Pillar rating. The team employs BlackRock’s Aladdin platform to fulfill much of its portfolio management tasks, and global trading desks allow traders to conduct foreign transactions in a cost-effective way.
The U.S.-domiciled fund is managed by the iShares U.S.-based team, which has endured some turnover in recent years. But index-tracking performance should remain tight, thanks to heavily automated processes and several long-tenured managers that remain at the helm. 
Amy Whitelaw left the team in February 2023 for another role within the organization. Paul Whitehead replaced Alan Mason as a manager in January 2022, when Mason left to focus on the firm’s customized institutional indexing capabilities. IShares has not named a successor for Whitelaw. Greg Savage, Jennifer Hsui, and Whitehead will continue to oversee the fund.
Meanwhile, the European-domiciled fund is managed by the EMEA team, which has maintained a notably low rate of turnover. IShares' London-based ETF portfolio management team is now headed by Sid Swaminathan, who took charge in February 2022. His service with the firm dates to 2005, including his years with BGI. These managers interact with a wider team of traders and managers around the globe to execute the fund’s day-to-day operations. The larger number of managers also limits the impact of personnel turnover when it does occur.

People

BlackRock offers compelling options across asset classes and vehicles. It earns an Above Average rating for Parent. 
The firm’s approximately USD 8 trillion in assets under management, as of Sept. 30, 2022, gives it unparalleled scale and influence. It is a market-leading index fund provider globally, and its iShares exchange-traded fund franchise offers a low-cost lineup of core funds that investors can use to build a well-diversified portfolio for dirt cheap. The firm can be more adventurous in its ETF launches than some peers, so not everything it launches is appropriate for the masses. As a result, it is likely to have more ETF closures than peers that stick to the basic building blocks.  
The firm’s active fixed-income and multi-asset efforts also stand out as some of the best in the industry. Those benefit from BlackRock’s commitment to building a first-class risk management system via its Aladdin analytics software. The software is also available for sale to other firms and has proved to be a popular option for competitors, a testament to its usefulness. 
More recently, the firm has shifted its focus to ESG offerings and incorporating ESG across its investment lineup, leading to a political backlash in the United States.
BlackRock isn’t the best at everything it tries to do, but retail investors, financial advisors, and large institutions could all build robust portfolios using BlackRock’s products.

Parent

iShares Core S&P Small Cap ETF

IJR tracks a market-cap-weighted index of primarily small-cap US stocks. The S&P Committee selects 600 stocks representing about 3% of the publicly available market.

The PEG ratio measures the PE ratio of a stock or index relative to its expected historical or expected growth, and US Small Caps seem extremely attractive on this basis. Small cap stocks have historically seen much stronger earnings growth and traded at a valuation premium, but they now trade at a record discount to the S&P500. I remain long the iShares Core S&P Small-Cap ETF and expect double-digit annual outperformance relative to the S&P500 over the coming years.

IJR: U.S. Small Caps Are A PEG Ratio Investor's Dream

iShares Core S&P Small-Cap ETF is a popular low-cost, stable fund. We measure IJR's qualities relative to its largest peer, IWM. Cheaply valued small-caps could benefit from mean-reversion, as could small-cap financials which look very oversold.

IJR: Some Enticing Underlying Themes

Global X Artificial Intelligence & Technology ETF

iShares Russell 2000 ETF

Invesco QQQ

SPDR Portfolio Small Cap ETF

Vanguard Small-Cap ETF

Schwab U.S. Small-Cap ETF

This year has been the year of innovation, with artificial intelligence (AI) all the rage. Yet, many advisors are focusing on other investment styles to round out client portfolios.

Chart of the Week: Small Cap ETFs Come in Different Packages

Looking for broad exposure to the Small Cap Blend segment of the US equity market? You should consider the iShares Core S&P Small-Cap ETF (IJR), a passively managed exchange traded fund launched on 05/22/2000.

Should iShares Core S&P Small-Cap ETF (IJR) Be on Your Investing Radar?

SPDR Portfolio S&P 500 High Dividend ETF

Vanguard Value ETF

Equity markets have performed remarkably well in 2023 and could continue to defy expectations. Still, volatility or sour earnings can make investors hesitant about betting on a particular business or industry.

The Year's Top 3 Value ETFs as of August 2023

Global X Robotics & Artificial Intelligence ETF

Invesco China Technology ETF

Invesco DWA SmallCap Momentum ETF

iShares Global Clean Energy ETF

iShares Core S&P 500 ETF

KraneShares Global Carbon ETF

VanEck Vectors Oil Services ETF

Invesco Solar ETF

United States Natural Gas Fund LP

Global X Uranium ETF

Sprott Uranium Miners ETF

Hello! This is MarketWatch reporter Isabel Wang bringing you this week's ETF Wrap. In this week's edition, we look at flows into U.S. exchange-traded funds in July which recorded their second-best month of 2023 as stock market's rally gained steam and widened beyond the first-half winners.

ETF flows in July point to a more balanced stock-market rally as mid- and small-cap funds start to outperform first-half winners

iShares Russell 2000 Value ETF

Vanguard Small Cap Value ETF

After lagging this year, small-cap stocks have been showing strong momentum since the start of June, beating the broader market.

Top-Ranked ETFs to Buy on Small-Cap Comeback

Small-cap US stocks, particularly the iShares Core S&P Small-Cap ETF, are poised for significant gains and outperformance against large-cap stocks. The IJR's undervaluation is supported by its price-to-sales ratio, P/E ratio, and dividend yield compared to the S&P 500. Despite risks from small-cap bank stocks, the IJR offers investors cheap exposure to the US market with the potential for 10% annual outperformance over the next decade.

IJR: Small Cap Recovery Has Begun

Following the recent weakness in small cap banks, the small cap discount relative to the S&P500 is now close to its highest level seen since the late-1990s. US small caps may outperform the S&P 500 by as much as 10% annually over the coming years as they did following the tech bubble.

IJR: Small Caps Offer Excellent Relative Value

iShares Russell 1000 Value ETF

iShares Russell 1000 Growth ETF

Invesco S&P 500 High Beta ETF

Invesco S&P 500 Low Volatility ETF

SPDR S&P 500 ETF Trust

Invesco Dynamic Credit Opportunities Fund

Vanguard Total Stock Market ETF

Vanguard FTSE Emerging Markets ETF

Utilities Select Sector SPDR Fund

Profiling trends through pairs of ETFs continue to tell a story of failed breakouts and frustrated expectations. The trend barely wavered for US stocks over shares in emerging markets.

Trend Profiles Revive Outlook For U.S., Big-Cap And Growth Equities

iShares Core U.S. Aggregate Bond ETF

Vanguard Total Bond Market ETF

Vanguard Total International Bond ETF

iShares Core S&P Mid-Cap ETF

iShares National Muni Bond ETF

Vanguard FTSE Developed Markets ETF

Vanguard S&P 500 ETF

This year, let alone a few days in mid-March, is a good reminder of the role bonds and bond ETFs can play within a portfolio.

Once Again, Bond ETFs Provide Diversification Benefits

Atlantic Union Bankshares Corp

Kennedy-Wilson Holdings

Motorcar Parts of America

Park Electrochemical

Take Park Aerospace (NYSE: PKE), which dropped 10% upon news that it'd be removed from the S&P Small-Cap 600 index. Or Kennedy-Wilson (NYSE: KW), which rose 10% on news that it'd be added to the small-cap index.

Here's What Happens When a Stock is Removed from an Index

JPMorgan Equity Premium Income ETF

Actively managed ETFs have started 2023 well, seeing 40% of total ETF flows this year compared to less than 14% last year. The actively managed class of ETFs was also the focus of a conversation between VettaFi's head of research Todd Rosenbluth and TD Ameritrade host Renita Young on “The Watch List” on Tuesday.

Todd Rosenbluth Chats Active ETFs on TD Ameritrade

SPDR S&P Midcap 400 ETF Trust

SPDR S&P 600 Small Cap ETF

Vanguard S&P Small-Cap 600 ETF

A $1.8 billion fund will be merged into a $5.2 billion fund.

State Street to Merge Small Cap ETFs into $7B Behemoth

Alerian MLP ETF

Avantis U.S. Small Cap Value ETF

Invesco Alerian Galaxy Blockchain Users and Decentralized Commerce ETF

First Trust NASDAQ Global Auto Index Fund

Dimensional US Small Cap ETF

Goldman Sachs Activebeta U.S. Small Cap Equity ETF

iShares S&P Small-Cap 600 Value ETF

iShares S&P Small-Cap 600 Growth ETF

ROBO Global Robotics and Automation ETF

iShares MSCI USA Small-Cap Multifactor ETF

Procure Space ETF

Small-cap ETFs have started the year hot relative to other investment factors, whether thanks to their valuations or their ability to be nimble. Today, the VettaFi voices gather around the water cooler to talk about how best to understand small-caps and peel back some of the misconceptions around the asset class.

VettaFi Voices On: The Surprises Inside Small-Cap ETFs

A Bull Market Is Coming: Why Buying These ETFs Is a Smart Move

Schwab U.S. Small-Cap ETF, SCHA, seeks to track the performance of the Dow Jones U.S. Small-Cap Total Stock Market Index. iShares Core S&P Small-Cap ETF, IJR, seeks to track the performance of the S&P SmallCap 600 Index.

SCHA Vs. IJR: Schwab's Small-Cap ETF Underperforming The Big Dog

Vanguard Russell 2000 ETF

January Effect is a seasonal increase in stock prices due largely to year-end tax considerations. Investors redeploy their capital to speculate on weaker performers in January after selling winners in December to create tax losses.

5 Top-Ranked Small-Cap ETFs to Buy for the January Effect

The default options for many investors are the large-cap S&P 500 index and the small-cap Russell 2000. However, their lesser-known cousins, the S&P 600 small-cap index (IJR) and the S&P 400 mid-cap index (IJH) offer better valuations and historically superior returns.

Be A Better Bull: IJR And IJH Are Superior To The S&P 500 And Russell 2000

IHS Holding Ltd

iShares S&P Mid-Cap 400 Value ETF

iShares S&P Mid-Cap 400 Growth ETF

iShares S&P 500 Value ETF

iShares S&P 500 Growth ETF

iShares MSCI USA Momentum Factor ETF

iShares MSCI USA Quality Factor ETF

iShares Edge MSCI Min Vol USA ETF

Vanguard High Dividend Yield ETF

Vanguard High Dividend Yield (VYM) is now posting a modest 1.7% year-to-date gain through Tuesday's close (Dec. 13). VYM has enjoyed a strong recovery in the past two months and currently trades just below a record high.

Dividend Yield Is 2022's Upside Outlier For Equity Factor Returns

 Invesco S&P SmallCap Consumer Discretionary ETF

Invesco S&P 500 Pure Growth ETF

SPDR S&P Retail ETF

A solid historical performance, Santa Claus Rally, a less-hawkish Federal Reserve and encouraging inflation data could unleash a mega-rally in December.

5 Top-Ranked ETFs to Buy for December

Invesco Taxable Municipal Bond ETF

Franklin Investment Grade Corporate ETF

AGF Global Infrastructure ETF

Quadratic Interest Rate Volatility and Inflation ETF

Harbor Health Care ETF

Invesco S&P 500 Equal Weight Energy ETF

iShares 1-3 Year Treasury Bond ETF

iShares TIPS Bond ETF

These are the questions on every investor's mind: Have markets really priced in the severity of the Fed's campaign against inflation? How bad would a 2023 recession be — if there is one at all?

3 Ways to Play iShares' 2023 Hot Takes With ETFs

iShares US Infrastructure ETF

iShares Trust iShares 1-5 Year Investment Grade Corporate Bond ETF

iShares MBS ETF

iShares MSCI Global Agriculture Producers ETF

iShares MSCI USA Value Factor ETF

Hello! In this week's ETF Wrap, BlackRock's Gargi Chaudhuri, head of iShares investment strategy for the Americas, discusses ways for investors to play a world of higher rates and elevated inflation in 2023.

Where BlackRock sees ‘tremendous' market opportunities for ETF investors in 2023 after damage to stocks, bonds

Should iShares Core S&P SmallCap ETF (IJR) Be on Your Investing Radar?

iShares Nasdaq Biotechnology ETF

Energy Select Sector SPDR Fund

Albion Financial's Jason Ware sees funds as mainstays in ‘core-satellite' planning.

ETFs Find a Role in a Long-Term Portfolio

News for iShares Core S&P Small Cap ETF ETF (IJR)