Looking for broad exposure to the Small Cap Growth segment of the US equity market? You should consider the SPDR S&P 600 Small Cap Growth ETF (SLYG), a passively managed exchange traded fund launched on 09/25/2000.
The fund is sponsored by State Street Global Advisors. It has amassed assets over $3.76 billion, making it one of the larger ETFs attempting to match the Small Cap Growth segment of the US equity market.
Why Small Cap Growth
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.
While growth stocks do boast higher than average sales and earnings growth rates, and they are expected to grow faster than the wider market, investors should note these kinds of stocks have higher valuations. Additionally, growth stocks have a greater level of risk associated with them. Even though growth stocks are more likely to outperform their value counterparts in strong bull markets, value stocks have a record of delivering better returns in almost all markets than growth stocks.
Costs
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.15%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.17%.
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 Industrials sector--about 20.30% of the portfolio. Healthcare and Financials round out the top three.
Looking at individual holdings, Glaukos Corp (GKOS) accounts for about 1.19% of total assets, followed by Alaska Air Group Inc (ALK) and Ati Inc (ATI).
The top 10 holdings account for about 9.82% of total assets under management.
Performance and Risk
SLYG seeks to match the performance of the S&P SmallCap 600 Growth Index before fees and expenses. The S&P SmallCap 600 Growth Index measures the performance of the small-capitalization growth sector in the U.S. equity market. The selection universe for the S&P SmallCap 600 Index includes all U.S. common equities listed on the NYSE, NASDAQ Global Select Market, NASDAQ Select Market and NASDAQ Capital Market with market capitalizations between $250 million and $1.2 billion.
The ETF return is roughly 4.06% so far this year and is up about 15.97% in the last one year (as of 01/27/2025). In the past 52-week period, it has traded between $81.03 and $100.66.
The ETF has a beta of 1.12 and standard deviation of 21.86% for the trailing three-year period, making it a medium risk choice in the space. With about 341 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR S&P 600 Small Cap Growth 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, SLYG is a good option for those seeking exposure to the Style Box - Small Cap Growth area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 2000 Growth ETF (IWO) and the Vanguard Small-Cap Growth ETF (VBK) track a similar index. While iShares Russell 2000 Growth ETF has $13.08 billion in assets, Vanguard Small-Cap Growth ETF has $20.56 billion. IWO has an expense ratio of 0.24% and VBK charges 0.07%.
Bottom-Line
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they 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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Get it free >>SPDR S&P 600 Small Cap Growth ETF (SLYG): ETF Research Reports
ATI Inc. (ATI) : Free Stock Analysis Report
Alaska Air Group, Inc. (ALK) : Free Stock Analysis Report
iShares Russell 2000 Growth ETF (IWO): ETF Research Reports
Glaukos Corporation (GKOS) : Free Stock Analysis Report
Vanguard Small-Cap Growth ETF (VBK): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.