The best ETFs for USA Small Cap Stocks

How do I invest in USA Small Cap stocks?

It is well known that companies with smaller market capitalizations generate higher returns over the long term. However, they also come with higher risks that investors should efficiently manage. Diversification of investments with ETFs is the safest bet for an independent investor to approach the small cap stocks.

There are essentially three indices available to invest with ETFs in USA small cap companies. This Investment Guide for USA small cap stocks will help you navigate between the peculiarities of the Russell 2000®, MSCI USA Small Cap, S&P Small Cap 600 and ETFs tracking them. It will allow you to find the most suitable small cap USA ETFs for you by ranking them according to your preferences.

0.30% p.a. - 0.45% p.a.
annual total expense ratio (TER) of USA small cap ETFs
on USA small cap stocks, which is tracked by ETFs
on USA small cap stocks
The best indices for USA small cap ETFs

The best USA Small Cap ETF by 1-year fund return as of 30.11.16

All USA small cap ETFs ranked by fund return

 

The largest USA Small Cap ETF by fund size in EUR

All USA small cap ETFs ranked by fund size

 

The cheapest USA Small Cap ETF by total expense ratio

All USA small cap ETFs ranked by total expense ratio

 
 

Indices on USA Small Cap Stocks compared

Methodologies of the compared indices

MSCI USA Small Cap Russell 2000® S&P Small Cap 600
Number of ETFs 2 ETFs 5 ETFs 1 ETF
Number of constituents 1,833
(31.10.16)
2,000 600
Investment universe MSCI US Investable Market 2500 Index: 2,496 constituents (30/09/2014) Russell 3000® Index: 3,000 US companies representing approximately 98% of the investable US equity market S&P 1500® Composite Index: appr. 1,500 companies representing appr. 91% of the available US market cap
Index rebalancing Quarterly Annually (new IPOs additions quarterly) Quarterly
Selection criteria Companies ranked by size covering appr. lowest 14% of the free float-adjusted market cap in the US Companies ranked 1,001 to 3,000 by total market cap in the underlying Russell 3000® Index Companies with unadjusted market cap of 400 million to 1.8 billion USD
Index weighting Market cap
(free float)
Total market cap Market cap
(free float)

Source: justETF Research; As of 30/09/2014

 

MSCI USA Small Cap Index

The MSCI USA Small Cap Index measures the performance of the small cap segment of the US market. The index represents appr. lowest 14% (by free float market cap of companies) of the free float-adjusted market capitalization of the US investable market. The index is based on free float market capitalization.

 

Methodology of the MSCI USA Small Cap Factsheet Methodology

  • Appr. 1,833 (31.10.16) small cap stocks from the United States
  • Index rebalancing takes place quarterly
  • Investable index has minimum size, free float, liquidity and length of trading criteria
  • Stock selection is based on free float market cap
  • Selection criteria: Companies ranked by size covering appr. lowest 14% of the free float-adjusted market cap in the US
  • Index weighted by free float market cap
 

Russell 2000® Index

The Russell 2000® Index measures the performance of the small cap segment of the US equity universe. The Russell 2000® Index is a subset of the Russell 3000® Index. It includes appr. 2,000 of the smallest securities based on a combination of their market cap and current index membership. The Russell 2000® Index represents appr. 10% of the total market capitalization of the Russell 3000® Index.

 

Methodology of the Russell 2000® Factsheet Methodology

  • Appr. 2000 small cap stocks from the United States
  • Index rebalancing takes place annually, except for the additions due to new IPO, which take place quarterly
  • Underlying investable index has requirements for inclusion such as minimum market cap, closing price, free float, location of trading of the majority of a company's shares
  • Stock selection is based on total market cap
  • Companies ranked 1001 to 3000 by total market cap in the underlying Russell 3000® Index are included
  • Index weighted by total market cap
 

S&P Small Cap 600 Index

The S&P Small Cap 600 Index includes 600 small cap US stocks from the underlying S&P 1500® Composite Index. Companies with an unadjusted market cap of 400 million to 1.8 billion USD are included in the index.

 

Methodology of the S&P Small Cap 600 Factsheet Methodology

  • 600 small cap stocks from the United States
  • Index rebalancing takes place quarterly
  • Index is a subset of S&P 1500® Composite Index and covers more than 3% of available US market cap
  • Index has minimum liquidity, free float and financial viability (positive earnings in the last year and quarter) inclusion criteria
  • Selection criteria: companies with unadjusted market cap of 400 million to 1.8 billion USD are included
  • Index weighted by free float market cap
 

USA Small Cap ETFs in comparison

The most important factors at a glance

When choosing a USA small cap ETF one should consider several other factors in addition to the methodology of the underlying index and performance of an ETF. For better comparison, you will find a list of all USA small cap ETFs with details on size, cost, age, income, domicile and replication method ranked by fund size.

Compare all USA small cap ETFs in detail
Compare all USA small cap ETFs in a chart

Provider
ISIN
  Fund size
in m EUR
TER
in %
Use of profits Fund domicile Replication method
iShares S&P SmallCap 600 UCITS ETFIE00B2QWCY14 829 0.40% p.a. Distributing Ireland Optimized sampling
iShares MSCI USA Small Cap UCITS ETFIE00B3VWM098 450 0.43% p.a. Accumulating Ireland Optimized sampling
db x-trackers Russell 2000 UCITS ETF (DR) 1CIE00BJZ2DD79 404 0.45% p.a. Accumulating Ireland Optimized sampling
Source Russell 2000 UCITS ETF AIE00B60SX402 343 0.45% p.a. Accumulating Ireland Unfunded swap
SPDR Russell 2000 US Small Cap UCITS ETFIE00BJ38QD84 289 0.30% p.a. Accumulating Ireland Optimized sampling
Amundi ETF Russell 2000 UCITS ETF EURFR0011636190 193 0.35% p.a. Accumulating France Unfunded swap
ComStage MSCI USA Small Cap TRN UCITS ETFLU0392496005 73 0.35% p.a. Accumulating Luxembourg Unfunded swap
SPDR MSCI USA Small Cap Value Weighted UCITS ETFIE00BSPLC413 47 0.30% p.a. Accumulating Ireland Optimized sampling
ETFS Russell 2000 US Small Cap GO UCITS ETFDE000A0Q8NE4 38 0.45% p.a. Accumulating Ireland Unfunded swap
WisdomTree US SmallCap Dividend UCITS ETFDE000A14ND20 14 0.38% p.a. Distributing Ireland Full replication

Source: justETF.com; As of 09.12.16

 

Return comparison of all Small Cap ETFs on US equities

The table shows the returns of all USA small cap ETFs in comparison. All return figures are including dividends as of month end. Besides the return the reference date on which you conduct the comparison is important. In order to find the best ETFs, you can also perform a chart comparison.

ETF   1 month
in %
3 months
in %
6 months
in %
1 year
in %
3 years
in %
WisdomTree US SmallCap Dividend UCITS ETF 14.84% 12.62% 20.87% 18.68% -
iShares S&P SmallCap 600 UCITS ETF 16.16% 13.09% 21.86% 15.15% 61.06%
SPDR MSCI USA Small Cap Value Weighted UCITS ETF 15.40% 13.49% 19.89% 14.41% -
ETFS Russell 2000 US Small Cap GO UCITS ETF 14.45% 11.74% 21.03% 11.08% 52.65%
SPDR Russell 2000 US Small Cap UCITS ETF 14.49% 11.72% 20.52% 11.08% -
iShares MSCI USA Small Cap UCITS ETF 12.51% 9.96% 16.75% 11.01% 56.23%
Amundi ETF Russell 2000 UCITS ETF EUR 14.09% 11.83% 21.26% 10.97% -
Source Russell 2000 UCITS ETF A 14.47% 11.74% 20.56% 10.97% 52.33%
ComStage MSCI USA Small Cap TRN UCITS ETF 12.58% 9.94% 16.87% 10.73% 55.65%
db x-trackers Russell 2000 UCITS ETF (DR) 1C 14.41% 11.63% 20.40% 10.69% -
ETF   2016
in %
2015
in %
2014
in %
2013
in %
2012
in %
WisdomTree US SmallCap Dividend UCITS ETF 27.68% 4.48% - - -
SPDR MSCI USA Small Cap Value Weighted UCITS ETF 25.41% - - - -
iShares S&P SmallCap 600 UCITS ETF 23.78% 8.72% 19.36% 34.40% 13.39%
SPDR Russell 2000 US Small Cap UCITS ETF 20.52% 7.29% - - -
ETFS Russell 2000 US Small Cap GO UCITS ETF 20.31% 6.28% 18.71% 32.28% 13.61%
Source Russell 2000 UCITS ETF A 20.29% 6.12% 18.61% 32.22% 12.73%
Amundi ETF Russell 2000 UCITS ETF EUR 20.24% 5.94% - - -
db x-trackers Russell 2000 UCITS ETF (DR) 1C 20.03% - - - -
iShares MSCI USA Small Cap UCITS ETF 19.42% 7.10% 21.00% 30.85% 15.22%
ComStage MSCI USA Small Cap TRN UCITS ETF 18.48% 6.58% 22.34% 33.35% 12.93%

Source: justETF.com; As of 30.11.16; Calculations in EUR including dividends