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he U.S. Small Cap Blend asset class has outperformed the U.S. Large Cap Blend asset class by 1.35% CAGR over the last 47 years - The oldest U.S. Small Cap Blend ETF has outperformed an S&P 500 index fund by 3.66% CAGR over the last 19 years
- There are 42 ETFs available in the U.S. Small Cap Blend category
- 10 of these ETFs have been available for 10 years or longer. This article will focus on these 10 older Small Cap Blend ETFs
U.S. Small Cap Blend vs U.S. Large Cap Blend: June 2000 – November 2019
The oldest U.S. Small Cap Blend ETF is the iShares Core S&P Small-Cap ETF (IJR). Its’ inception date was on May 22, 2000. Since inception, this ETF has outperformed an S&P 500 index fund by a whopping 3.66% CAGR.
IJR vs S&P 500: June 2000 – November 2019
IJR vs SPY: May 26, 2000 – December 6, 2019
Investors have 42 ETFs to choose from in the Morningstar U.S. Small Blend category. 10 of these ETFs have inception dates that are before December 1, 2009. I have compared all 10 of these older ETFs based on long-term performance only with the back testing tools at Portfolio Visualizer and Koyfin. The chart below shows how these ETFs compared against each other with these back tests. The yellow highlights are used to emphasize the superlatives of each column.
Source: https://www.morningstar.com/
The 4 best performing U.S. Small Cap Blend ETFs were SLY, IJR, EES and VB. The following charts depict how these four funds have performed in the past versus each other head-to-head.
SLY vs IJR vs EES vs VB: March 2007 – November 2019
SLY vs IJR vs EES vs VB: February 23, 2007 – December 6, 2019
SLY vs IJR: December 2005 – November 2019
IJR vs EES: March 2007 – November 2019
EES vs VB: March 2007 – November 2019
As you can see above, each of the top performing funds have very similar market activity and returns. Now let’s look at each of these U.S. Small Cap Blend fund’s stated objectives to get a better understanding on how they are managed:
SLY: The SPDR® S&P® 600 Small Cap ETF seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the S&P® SmallCap 600 IndexSM (the “Index”). The selection universe for the S&P SmallCap 600 Index includes all U.S. common equities with market capitalizations generally between $450 million and $2.1 billion at the time of inclusion. The Index is float-adjusted and market capitalization weighted.
IJR: The iShares Core S&P Small-Cap ETF seeks to track the investment results of an index composed of small-capitalization U.S. equities. Exposure to U.S. small cap stocks. Low cost and tax efficient. Use at the core of a portfolio to seek long-term growth.
EES: WisdomTree U.S. SmallCap Fund seeks to track the investment results of earnings-generating small-cap companies in the U.S. equity market. Gain broad U.S. small cap equity exposure to profitable companies. Use to complement or replace small cap active and passive strategies with the potential for more favorable valuations.
VB: Vanguard Small-Cap ETF. Seeks to track the performance of the CRSP US Small Cap Index, which measures the investment return of small-capitalization stocks. Provides a convenient way to match the performance of a diversified group of small companies. Follows a passively managed, full-replication approach.
The U.S. Small Cap Blend asset class has been an excellent way to diversify the equity portion of a portfolio without sacrificing good returns. Today’s investors have the good fortune to have 42 ETFs to pick from in this category. The 4 best performing Small Cap Blend ETFs are very similar in portfolio construction and returns. In fact, there is only 0.44% CAGR difference between the #1 and #4 top performing funds. Because of their similarities, investors may want to choose one of these funds based on their expense ratio or another metric rather past performance alone.
Thank you for taking time to read this article. If you found it useful, please share it with a friend.
Respectfully yours, Micah McDonald, aka the Deep Value ETF Accumulator
Previous Deep Value ETF Accumulator articles on U.S. Small Cap Blend ETFs:
Best Long-Term Performance U.S. Small Cap Blend ETFs 1.2
Best Long-Term Performance U.S. Small Cap Blend ETFs 1.1
Disclosure: We currently own shares of EES and we intend to buy more shares in the future. I am not a professional investment advisor. Please perform you own due diligence or seek the advice of a Registered Investment Advisor before investing in any security mentioned in this article. This website contains affiliate links to M1 Finance and Google AdSense.