IWM comes with a decrease expense ratio, broader diversification, and the next dividend yield than IWO.
IWO is extra concentrated in healthcare and know-how shares, whereas IWM tilts towards financials and holds virtually twice as many corporations.
Over the previous 5 years, IWM noticed a smaller most drawdown than IWO.
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The iShares Russell 2000 ETF (NYSEMKT:IWM) stands out for its decrease prices, larger yield, and broader diversification, whereas the iShares Russell 2000 Progress ETF (NYSEMKT:IWO) focuses extra closely on growth-oriented small-cap shares.
Each IWM and IWO monitor segments of the small-cap U.S. inventory market, however IWM covers the total Russell 2000 Index, whereas IWO zeroes in on the expansion subset. This comparability highlights the place the 2 diverge on value, efficiency, and threat.
Metric | IWO | IWM |
|---|
Issuer | iShares | iShares |
Expense ratio | 0.24% | 0.19% |
1-yr return (as of Dec. 13, 2025) | 9.83% | 8.92% |
Dividend yield | 0.65% | 0.97% |
Beta (5Y month-to-month) | 1.40 | 1.30 |
AUM | $13.2 billion | $72.5 billion |
Beta measures worth volatility relative to the S&P 500. The 1-yr return represents complete return over the trailing 12 months.
IWM is extra reasonably priced on charges with a decrease expense ratio than IWO. It additionally affords the next dividend yield, which can enchantment to traders searching for extra earnings from their small-cap allocation.
Metric | IWO | IWM |
|---|
Max drawdown (5 y) | -42.02% | -31.91% |
Progress of $1,000 over 5 years | $1,212 | $1,334 |
IWM holds 1,951 shares, spanning U.S. small-cap corporations throughout all sectors. Whereas it is extremely diversified, it has notable tilts towards healthcare (18%), financials (18%), and industrials (17%).
Its high holdings are Bloom Power, Credo Expertise Group, and Fabrinet, every making up lower than 1% of the fund’s complete property. With over 25 years in the marketplace and no notable quirks or complicated overlays, IWM goals for broad, consultant publicity to the small-cap universe.
IWO, against this, focuses on the expansion phase of the Russell 2000, leading to a extra concentrated portfolio. Its high sectors embody healthcare (25%), industrials (22%), and know-how (21%).
Its largest positions mirror IWM’s however at larger allocations, reflecting IWO’s narrower focus. Traders searching for pure progress publicity could discover IWO’s sector tilt and better volatility notable, but it surely comes with fewer holdings and a extra concentrated threat profile.
For extra steerage on ETF investing, take a look at the total information at this hyperlink.
IWO and IWM each provide entry to small-cap shares, however they differ of their targets and portfolio allocations.
IWM is the extra diversified of the 2, offering publicity to your complete small-cap market. It is much less centered on any explicit trade or particular person inventory, which might help restrict threat — particularly during times of volatility.
IWO, alternatively, affords a extra focused method, solely containing shares which have proven better potential for progress. Its portfolio is round half the scale of IWM’s, but it surely’s extra closely tilted towards a handful of industries.
Diversification could be a double-edged sword in some circumstances. Whereas extra selection might help mitigate threat, it might probably additionally dilute returns — with lower-performing shares typically dragging down your complete fund’s incomes potential.
IWO has earned barely larger returns over the previous yr in comparison with IWM. Nonetheless, it is also seen a extra vital max drawdown, indicating extra extreme worth swings over the previous few years.
Earlier than investing determination, think about your major targets and threat tolerance. Traders who’re comfy with barely larger threat ranges for the possibility at incomes larger returns could go for the growth-focused IWO, whereas these searching for to mitigate threat with small-cap shares could desire the extra diversified IWM.
Expense ratio: The annual price, as a proportion of property, that an ETF or fund expenses to cowl working prices.
Diversification: The apply of spreading investments throughout numerous property or sectors to cut back threat.
Dividend yield: Annual dividends paid by an funding, expressed as a proportion of its present worth.
Small-cap: Refers to corporations with comparatively small market capitalizations, usually between $300 million and $2 billion.
Progress inventory: A inventory anticipated to develop earnings or income quicker than the general market common.
Russell 2000 Index: A inventory market index monitoring 2,000 small-cap U.S. corporations.
Drawdown: The height-to-trough decline in an funding’s worth, often expressed as a proportion.
Beta: A measure of an funding’s volatility in comparison with the general market, usually utilizing the S&P 500 as a benchmark.
AUM (Belongings Beneath Administration): The entire market worth of property that an funding fund manages on behalf of traders.
Sector tilt: When a portfolio has the next allocation to sure industries or sectors in comparison with a benchmark.
Concentrated threat profile: When an funding or portfolio is closely weighted in a couple of holdings or sectors, rising threat.
ETF (Alternate-Traded Fund): An funding fund traded on inventory exchanges, holding a basket of property like shares or bonds.
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Katie Brockman has no place in any of the shares talked about. The Motley Idiot has no place in any of the shares talked about. The Motley Idiot has a disclosure coverage.
IWM and IWO Present Small-Cap Diversification, However One Affords Extra Progress Potential for Traders was initially printed by The Motley Idiot
