The SPDR Portfolio S&P 600 Small Cap ETF (SPSM) was launched on 07/08/2013, and is a passively managed exchange traded fund designed to offer broad exposure to the Small Cap Blend segment of the US equity market.
The fund is sponsored by State Street Global Advisors. It has amassed assets over $5.26 billion, making it one of the larger ETFs attempting to match the Small Cap Blend segment of the US equity market.
Why Small Cap Blend
With more potential comes more risk, and small cap companies, with market capitalization below $2 billion, epitomizes this way of thinking.
Blend ETFs are aptly named, since they tend to hold a mix of growth and value stocks, as well as show characteristics of both kinds of equities.
Costs
When considering an ETF’s total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.05%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.58%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund’s holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Industrials sector–about 17.20% of the portfolio. Financials and Consumer Discretionary round out the top three.
Looking at individual holdings, Ensign Group Inc. (ENSG) accounts for about 0.61% of total assets, followed by Sps Commerce Inc. (SPSC) and Rambus Inc. (RMBS).
The top 10 holdings account for about 4.97% of total assets under management.
Performance and Risk
SPSM seeks to match the performance of the Russell 2000 Index before fees and expenses. The S&P SmallCap 600 Index is designed to measure the performance of the small-capitalization segment of the U.S. equity market.
The ETF has lost about -0.29% so far this year and is down about -6.42% in the last one year (as of 05/01/2023). In the past 52-week period, it has traded between $33.99 and $42.08.
The ETF has a beta of 1.14 and standard deviation of 25.41% for the trailing three-year period. With about 610 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR Portfolio S&P 600 Small Cap ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, SPSM is a great option for investors seeking exposure to the Style Box – Small Cap Blend segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Russell 2000 ETF (IWM) and the iShares Core S&P Small-Cap ETF (IJR) track a similar index. While iShares Russell 2000 ETF has $49.81 billion in assets, iShares Core S&P Small-Cap ETF has $65.01 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.
Bottom-Line
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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SPDR Portfolio S&P 600 Small Cap ETF (SPSM): ETF Research Reports
Rambus, Inc. (RMBS) : Free Stock Analysis Report
SPS Commerce, Inc. (SPSC) : Free Stock Analysis Report
iShares Russell 2000 ETF (IWM): ETF Research Reports
The Ensign Group, Inc. (ENSG) : Free Stock Analysis Report
iShares Core S&P Small-Cap ETF (IJR): ETF Research Reports
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