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Should SPDR S&P 600 Small Cap ETF (SLY) Be on Your Investing Radar?

If you're interested in broad exposure to the Small Cap Blend segment of the US equity market, look no further than the SPDR S&P 600 Small Cap ETF (SLY), a passively managed exchange traded fund launched on 11/08/2005.

The fund is sponsored by State Street Global Advisors. It has amassed assets over $1.73 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

Sitting at a market capitalization below $2 billion, small cap companies tend to be high-potential stocks compared to its large and mid cap counterparts, but come with higher risk.

Typically holding a combination of both growth and value stocks, blend ETFs also demonstrate qualities seen in value and growth investments.

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 0.15%, making it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 1.54%.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Financials sector--about 19.10% of the portfolio. Industrials and Information Technology round out the top three.

Looking at individual holdings, Southwestern Energy Company (SWN) accounts for about 0.91% of total assets, followed by Agree Realty Corporation (ADC) and Omnicell Inc. (OMCL).

The top 10 holdings account for about 5.95% of total assets under management.

Performance and Risk

SLY seeks to match the performance of the S&P SmallCap 600 Index before fees and expenses. The S&P SmallCap 600 Index measures the performance of the small-capitalization sector in the US equity market.

The ETF has lost about -12.31% so far this year and is down about -6.33% in the last one year (as of 08/03/2022). In the past 52-week period, it has traded between $77.50 and $104.37.

The ETF has a beta of 1.14 and standard deviation of 30.55% for the trailing three-year period, making it a medium risk choice in the space. With about 603 holdings, it effectively diversifies company-specific risk.

Alternatives

SPDR S&P 600 Small Cap ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, SLY is a reasonable option for those seeking exposure to the Style Box - Small Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.

The iShares Russell 2000 ETF (IWM) and the iShares Core S&P SmallCap ETF (IJR) track a similar index. While iShares Russell 2000 ETF has $53.54 billion in assets, iShares Core S&P SmallCap ETF has $67.73 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.

Bottom-Line

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

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 S&P 600 Small Cap ETF (SLY): ETF Research Reports
 
Omnicell, Inc. (OMCL): Free Stock Analysis Report
 
Southwestern Energy Company (SWN): Free Stock Analysis Report
 
Agree Realty Corporation (ADC): Free Stock Analysis Report
 
iShares Russell 2000 ETF (IWM): ETF Research Reports
 
iShares Core S&P SmallCap ETF (IJR): ETF Research Reports
 
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