IWM vs SPY: iShares Russell 2000 ETF vs SPDR S&P 500 ETF Trust Comparison
Compare IWM (iShares Russell 2000 ETF) and SPY (SPDR S&P 500 ETF Trust) by expense ratio, dividend yield, holdings, and more.
Key Differences
- 1Expense ratio: SPY 0.0945% vs IWM 0.19% (SPY is 0.10%p cheaper)
- 2Dividend yield: SPY 1.26% vs IWM 1.24%
- 3Category: IWM is Small Cap, SPY is Index Tracking
- 4Holdings: IWM 1,990 vs SPY 503
- 5Issuer: IWM (BlackRock(iShares)) vs SPY (State Street(SPDR))
Conclusion
IWM and SPY each have different strengths, so the choice depends on your investment objectives. Choose the one with lower fees if cost is a priority, or the one with higher yield if income is your goal.
| Category | IWM | SPY |
|---|---|---|
| Fund Name | iShares Russell 2000 ETF | SPDR S&P 500 ETF Trust |
| Current Price | ... | ... |
| Category | Small Cap | Index Tracking |
| Expense Ratio | 0.19% | 0.0945% |
| Dividend Yield | 1.24% | 1.26% |
| Holdings | 1990 | 503 |
IWM Top Holdings
- 1. Super Micro Computer
- 2. MicroStrategy
- 3. Comfort Systems
SPY Top Holdings
- 1. Apple
- 2. Microsoft
- 3. Amazon
- 4. Nvidia
- 5. Alphabet
IWM Features
- •Small-cap specialized
- •Growth potential
- •Tracks the Russell 2000
- •High volatility
SPY Features
- •Tracks the S&P 500
- •Highest liquidity
- •Market representativeness
- •Long-established ETF
Pros & Cons
IWM
Advantages
- ✓ Captures small-cap growth
- ✓ Benefits from economic recovery
- ✓ M&A premium
Disadvantages
- ⚠ High volatility
- ⚠ Liquidity risk
- ⚠ Economically sensitive
SPY
Advantages
- ✓ Total US market exposure
- ✓ Very high liquidity
- ✓ Stable management
Disadvantages
- ⚠ Market risk
- ⚠ Large-cap concentration
- ⚠ Potential growth slowdown
Investment Strategy
Best For: IWM
Allocate 10-20% of total portfolio; adjust based on business cycle
Best For: SPY
Use as core asset; maintain 30-50% portfolio allocation
Detailed Analysis
IWM (iShares Russell 2000 ETF) and SPY (SPDR S&P 500 ETF Trust) They belong to different categories — Small Cap and Index Tracking — representing distinct investment areas. IWM: iShares Russell 2000 ETF (IWM) is an exchange-traded fund that provides investors with exposure to small-capitalization companies. It carries an expense ratio of 0.19%. The fund offers a dividend yield of approximately 1.24%. The portfolio holds 1990 securities. With an expense ratio of 0.19% and dividend yield of 1.24%, its top holdings include Super Micro Computer, MicroStrategy, Comfort Systems. Key features include Small-cap specialized, Growth potential, with Captures small-cap growth being a major advantage. SPY: SPDR S&P 500 ETF Trust (SPY) is an exchange-traded fund that provides investors with exposure to broad market indices. It carries an expense ratio of 0.09%. The fund offers a dividend yield of approximately 1.26%. The portfolio holds 503 securities. With an expense ratio of 0.0945% and dividend yield of 1.26%, top holdings include Apple, Microsoft, Amazon. Notable features are Tracks the S&P 500, Highest liquidity, with Total US market exposure as a core strength. In terms of expense ratio, SPY is 0.10%p cheaper, which can lead to significant cost savings through compounding over long-term investment. Over 20 years with a $100,000 investment, this difference can amount to thousands of dollars.
Investment Recommendation
IWM is suitable for Allocate 10-20% of total portfolio; adjust based on business cycle, while SPY is suitable for Use as core asset; maintain 30-50% portfolio allocation. Since they are in different categories, holding both can provide portfolio diversification benefits. Adjust the allocation based on your risk tolerance and investment horizon. For beginners, we recommend a core-satellite strategy: choose a low-cost, well-diversified ETF as your core holding, and allocate the rest to satellite positions.
Key Summary
Both IWM and SPY are excellent ETFs for their respective investment objectives. The key is to choose based on your investment goals, time horizon, and risk tolerance. Rather than focusing on a single metric (dividend yield, fees, etc.), evaluate from a holistic portfolio perspective. Use our rebalancing calculator to easily determine the optimal asset allocation including both ETFs.
IWM vs SPY Investment Guide
Both IWM and SPY are popular US ETFs, but they differ in investment strategy and portfolio role. IWM has an expense ratio of 0.19%, while SPY charges 0.0945%, giving SPY a cost advantage. In terms of dividend yield, IWM offers 1.24% while SPY offers 1.26%, making SPY the better choice for income investors.
When choosing between the two, consider your investment goals, time horizon, and risk tolerance. If long-term growth is your priority, favor the ETF with lower fees and broader diversification. If you need steady cash flow, the higher-yielding ETF may be more suitable. You can also hold both in your portfolio for a complementary approach.
Regardless of which ETF you choose, maintaining your target allocation through regular rebalancing is key to long-term performance. Review your portfolio quarterly or semi-annually, and adjust if weights have drifted significantly. Our rebalancing calculator can automatically determine the buy/sell quantities for each holding.
5 Things to Check When Comparing ETFs
Expense Ratio: Even a 0.1% difference in fees can translate to thousands of dollars over long-term investing. When two ETFs track a similar index, the lower-cost option has the edge.
Tracking Index & Holdings: Even ETFs in the same category may track different indices. Review the top holdings and sector weights to find the best fit for your investment goals.
Dividend Policy: Compare dividend frequency (monthly vs quarterly), yield, and dividend growth rate. Monthly dividend ETFs may be preferable if you need regular cash flow.
Trading Volume & Liquidity: Sufficient daily trading volume ensures you can buy and sell at fair prices. Low-volume ETFs may have wider bid-ask spreads, increasing your trading costs.
Portfolio Role: Determine whether the ETF serves as a core or satellite holding in your portfolio, and size your position accordingly.