Launched on 11/08/2005, the SPDRSP6 SC (SLY) is a passively managed exchange traded fund designed to provide a broad exposure to the Small Cap Blend segment of the US equity market.
The fund is sponsored by State Street Global Advisors. It has amassed assets over $1.89 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
Small cap companies have market capitalization below $2 billion. They usually have higher potential than large and mid cap companies with stocks but higher risk.
Typically holding a combination of both growth and value stocks, blend ETFs also demonstrate qualities seen in value and growth investments.
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 cheaper products in the space.
It has a 12-month trailing dividend yield of 1.08%.
Sector Exposure and Top Holdings
It is important to delve into an ETF’s holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Financials sector–about 18.70% of the portfolio. Industrials and Information Technology round out the top three.
Looking at individual holdings, Macy’s Inc (M) accounts for about 0.82% of total assets, followed by Omnicell Inc. (OMCL) and Chart Industries Inc. (GTLS).
The top 10 holdings account for about 5.89% 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 gained about 32.59% so far this year and is up about 51.79% in the last one year (as of 11/15/2021). In the past 52-week period, it has traded between $72.43 and $104.37.
The ETF has a beta of 1.20 and standard deviation of 29.54% for the trailing three-year period, making it a medium risk choice in the space. With about 605 holdings, it effectively diversifies company-specific risk.
SPDRSP6 SC holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, SLY is a great option for investors seeking exposure to the Style Box – Small Cap Blend segment of the market. There are other additional ETFs in the space that investors could consider as well.
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 $74.88 billion in assets, iShares Core S&P SmallCap ETF has $76.30 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.
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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