SCHA vs. SPSM: Which Small-Cap ETF Is the Better Choice for Investors?
Key Points
-
SCHA holds nearly three times as many stocks as SPSM and offers greater exposure to the small-cap market.
-
SCHA delivered a higher one-year return, but it experienced a deeper five-year drawdown.
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The expense ratios are nearly identical, but SPSM offers a slightly higher dividend yield.
Both the State Street SPDR Portfolio S&P 600 Small Cap ETF(NYSEMKT:SPSM) and the Schwab U.S. Small-Cap ETF(NYSEMKT:SCHA) are designed to provide investors with broad exposure to U.S. small-cap stocks, but they employ slightly different approaches.
This comparison examines how their costs, performance, risk, and portfolio composition compare for those considering which small-cap ETF may be the best fit.
Snapshot (cost & size)
|
Metric |
SPSM |
SCHA |
|---|---|---|
|
Issuer |
SPDR |
Schwab |
|
Expense ratio |
0.03% |
0.04% |
|
1-yr return (as of Jan. 2, 2026) |
5.32% |
11.33% |
|
Dividend yield |
1.70% |
1.38% |
|
Beta (5Y monthly) |
1.21 |
1.29 |
|
AUM |
$13 billion |
$19 billion |
Beta measures price volatility relative to the S&P 500. The 1-yr return represents total return over the trailing 12 months.
SPSM is more affordable on fees, with a slightly lower expense ratio compared to SCHA. SPSM also offers a modestly higher dividend yield, which may appeal to those seeking income alongside growth.
Performance & risk comparison
|
Metric |
SPSM |
SCHA |
|---|---|---|
|
Max drawdown (5 y) |
-27.95% |
-30.79% |
|
Growth of $1,000 over 5 years |
$1,322 |
$1,294 |
What's inside
SCHA tracks the performance of small-cap U.S. stocks using the Dow Jones U.S. Small-Cap Total Stock Market Index. The fund holds 1,745 stocks, making it considerably more diversified than many peers.
Its sector mix is led by financial services, technology, and healthcare, and its top positions include Sandisk, Lumentum Holdings, and Rocket Companies. SCHA does not employ leverage, currency hedging, or ESG screens, so it is relatively straightforward for those seeking broad small-cap exposure.
SPSM, in contrast, tracks the S&P SmallCap 600 Index, containing 607 stocks. Its largest sector allocations are financial services, industrials, and technology, and the largest holdings are Arrowhead Pharmaceuticals, Armstrong World Industries, and InterDigital. Like SCHA, SPSM does not have any structural quirks or overlays.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
Investing in small-cap stocks can be a smart way to diversify your portfolio and gain exposure to smaller companies with greater growth potential.
Between these two funds, SCHA has historically experienced slightly higher levels of volatility, with a higher beta and a more severe max drawdown. While it's outperformed SPSM over the past 12 months, it's earned lower five-year total returns.
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