Small-Cap ETFs: VB vs. SPSM – Let’s Be Real

Okay, so you want to play the small-cap game? Excellent. It’s like dating – high potential, but also a very real chance of things going sideways. We’re looking at the State Street SPDR Portfolio S&P 600 Small Cap ETF (SPSM 0.30%) and the Vanguard Small-Cap ETF (VB 0.09%). Both are trying to give you exposure to companies that aren’t quite household names… yet. Think of them as the quirky supporting characters in the market drama. One’s trying to be a broad, sweeping epic, the other a tightly-focused indie film.

The basic premise is diversification. You’re not putting all your eggs in the Apple basket, which, let’s face it, is a good strategy unless you really like apples. These ETFs are about spreading the risk, hoping a few little guys become big guys. But which one does it better? Let’s break it down, because I have a feeling someone’s expense ratio is about to make me judgey.

The Nitty Gritty (and the Numbers)

Metric	SPSM	VB
1-yr return (as of 2026-01-09)	11.6%	14.1%
Beta	1.23	1.27

Okay, VB is winning on returns. Not a landslide, but enough to make me raise an eyebrow. Beta’s pretty similar, meaning they’re both going to bounce around with the market. That’s good, unless you’re the type who needs a stock to just…stay still. Which, let’s be honest, is asking a lot.

Here’s where it gets interesting. SPSM is cheaper. Like, noticeably cheaper. It’s the off-brand version of the ETF, and sometimes, the off-brand is perfectly good. It’s like choosing between a designer handbag and a perfectly functional tote. Both carry your stuff. VB isn’t expensive, exactly, but in the world of ETFs, every basis point counts. It’s like skipping a latte every week – small change, big impact over time.

Under the Hood (What Are We Actually Buying?)

VB is the maximalist. It holds 1,357 stocks. That’s a lot of companies. It’s like going to a buffet and trying everything. You’re bound to find something you like, but also something that gives you indigestion. Top holdings include Insmed (INSM +1.35%), Comfort Systems USA (FIX +2.73%), and SoFi Technologies (SOFI 1.17%). They’re not exactly household names, but hey, that’s the point.

SPSM is more curated. It holds 607 companies. Think of it as a tasting menu. It’s focusing on quality over quantity. Top holdings include Arrowhead Pharmaceuticals (ARWR 3.64%), LKQ Corp (LKQ 1.24%), and Armstrong World Industries (AWI 0.19%). Still not exactly Apple and Google, but they’re trying. It’s leaning a bit more into financials, which, in this economy, is… a choice.

So, Which One?

Look, both of these ETFs are perfectly fine. They’re not going to revolutionize your portfolio. But if you’re like me and you appreciate a good deal, SPSM is tempting. It’s the sensible choice. It’s the one your accountant would approve of. VB, on the other hand, is for the person who wants maximum diversification, even if it costs a little extra. It’s the “treat yourself” ETF.

The bottom line? Small-cap stocks are volatile. They’re going to swing up and down. Don’t invest more than you can afford to lose. And for the love of all that is holy, don’t try to time the market. Just pick an ETF, set it, and forget it. Then go have a drink. You’ve earned it.

Glossary (Because Apparently We Need to Explain Everything)

ETF: Exchange-Traded Fund. It’s a basket of stuff.

Index-based: It tries to copy something else. Very original.

Expense ratio: The fee they charge you.

Dividend yield: Extra money they sometimes give you.

Beta: How much it bounces around.

AUM: How much money they’re managing.

Total return: How much money you made.

Max drawdown: How much money you lost.

Small-cap: Tiny companies.

Sector weight: Where they put their money.

Replication: Copying.

Leverage: Borrowing money. Don’t.

2026-01-18 18:04

The Nitty Gritty (and the Numbers)

Under the Hood (What Are We Actually Buying?)

So, Which One?

Glossary (Because Apparently We Need to Explain Everything)

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