How S&P 500 Stability Compares to Small-Cap Development Potential

Contents

Snapshot (price & measurement)
Efficiency & danger comparability
What’s inside
What this implies for buyers
Must you purchase inventory in iShares Belief – iShares Russell 2000 Development ETF proper now?

The iShares Russell 2000 Development ETF (NYSEMKT:IWO) and the Vanguard S&P 500 ETF (NYSEMKT:VOO) each present entry to a big swath of the U.S. equities market, however they take distinct approaches which will attraction to totally different investor priorities.

Whereas IWO targets aggressive progress in smaller corporations, VOO represents the core of the U.S. economic system by monitoring the S&P 500. This comparability highlights how these two distinct segments of the market have behaved over time.

Snapshot (price & measurement)

Metric	VOO	IWO
Issuer	Vanguard	iShares
Expense ratio	0.03%	0.24%
1-yr return (as of Might 9, 2026)	32.12%	43.20%
Dividend yield	1.08%	0.42%
Beta (5Y month-to-month)	1.00	1.46
Property below administration (AUM)	$1.6 trillion	$13.9 billion

Beta measures value volatility relative to the S&P 500; beta is calculated from five-year month-to-month returns. The 1-yr return represents whole return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

Value is a main differentiator, because the Vanguard fund is considerably extra reasonably priced for long-term buyers. Moreover, these in search of passive earnings might desire VOO’s greater dividend yield, reflecting the cash-flow-positive nature of large-cap corporations.

Efficiency & danger comparability

Metric	VOO	IWO
Max drawdown (5 yr)	-24.53%	-42.02%
Development of $1,000 over 5 years (whole return)	$1,876	$1,277

What’s inside

IWO offers publicity to roughly 1,100 holdings, with industrials, expertise, and healthcare making up its high three sectors. Its largest positions embody Bloom Vitality, Credo Know-how Group, and Sterling Infrastructure. This fund, which was launched in 2000, has a trailing-12-month dividend of $1.51 per share.

In distinction, VOO tracks the S&P 500 and holds simply over 500 shares, leaning closely into expertise, monetary companies, and communication companies. Its largest positions embody Nvidia, Apple, and Microsoft. VOO was launched in 2010 and paid $7.13 per share in dividends over the trailing 12 months.

For extra steerage on ETF investing, take a look at the total information at this hyperlink.

What this implies for buyers

VOO and IWO take totally different approaches to U.S. shares: VOO targets the biggest trade leaders, whereas IWO focuses on smaller, up-and-coming shares.

VOO presents three main benefits over IWO: larger stability, decrease charges, and better dividend earnings. As a result of this ETF holds shares from 500 of the biggest and strongest U.S. corporations, it’s extra prone to survive intervals of volatility. It presents a considerably decrease beta and max drawdown than IWO, suggesting smaller value fluctuations during the last 5 years.

With a decrease expense ratio and better dividend yield, buyers may count on to pay much less in charges whereas incomes extra passive earnings alongside funding progress with VOO. It costs an expense ratio of 0.03% in comparison with IWO’s 0.24%, which means buyers pays $3 or $24 in annual charges, respectively, for each $10,000 invested in every fund.

The place IWO shines, nonetheless, is its progress potential. The previous couple of years have been distinctive, as developments in synthetic intelligence have prompted large-cap tech shares to skyrocket. Typically, although, smaller shares usually have extra room for progress than their extra established friends. If any of the shares in IWO take off, this ETF might ship profitable returns.

Each IWO and VOO might be sensible investments, and the correct one for you’ll rely in your priorities and targets. VOO presents the soundness of large-cap shares with an emphasis on tech leaders, whereas IWO offers publicity to fast-growing small-cap shares with loads of long-term potential.

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Katie Brockman has positions in Vanguard S&P 500 ETF. The Motley Idiot has positions in and recommends Apple, Bloom Vitality, Microsoft, Nvidia, Sterling Infrastructure, and Vanguard S&P 500 ETF. The Motley Idiot has a disclosure coverage.

Vanguard VOO vs. iShares IWO: How S&P 500 Stability Compares to Small-Cap Development Potential was initially revealed by The Motley Idiot