Small-Cap Growth ETF Selection: Why SLYG Outshines IJT in Cost Efficiency and Yield

Investors seeking exposure to small-cap growth stocks often face a critical decision: choosing between structurally similar exchange-traded funds (ETFs) that differ in subtle but meaningful ways. The SPDR S&P 600 Small Cap Growth ETF (SLYG) and the iShares S&P Small-Cap 600 Growth ETF (IJT) both track the S&P SmallCap 600 Growth Index, yet their divergences in cost efficiency, dividend yield, and liquidity merit closer scrutiny. For long-term investors prioritizing fee optimization and income generation, SLYG emerges as the more compelling option, despite near-identical risk profiles and sector exposures.

Cost Efficiency: SLYG's Fee Advantage Compounds Over Time

Expense ratios, though seemingly minor, exert a outsized influence on long-term returns. According to data from ETFdb and Portfolioslab, SLYG charges an expense ratio of 0.15%, while IJT's ratio stands at 0.25% according to ETFdb comparison data. This 10-basis-point difference may appear trivial, but over decades of compounding, it can erode significant value. For example, a $100,000 investment in SLYG would save approximately $15,000 in fees over 30 years compared to IJT, assuming identical returns. In an asset class like small-cap growth-where active management and higher turnover traditionally justify elevated fees-SLYG's cost structure is a rare edge.

Performance and Liquidity: SLYG Edges Out IJT Slightly

Performance differentiation between the two ETFs is minimal but non-zero. Over the three-year period from 2023 to 2025, SLYG delivered a 11.33% annualized return, outperforming IJT's 11.28% by a narrow margin according to PortfolioLab analysis. While this gap is statistically insignificant in isolation, it aligns with SLYG's broader efficiency theme. Additionally, SLYG exhibits superior liquidity, with higher average daily trading volume over the past three months according to ETFdb data. For investors requiring ease of entry or exit, this liquidity premium reduces slippage risk and enhances execution certainty.

Yield and Risk: SLYG's Dividend Edge vs. Slightly Higher Volatility

Small-cap growth stocks are typically not known for robust dividend yields, but SLYG still outperforms IJT in this regard. SLYG's trailing twelve-month (TTM) dividend yield of 1.09% exceeds IJT's 0.89%, offering a modest but meaningful income advantage for income-focused investors according to PortfolioLab comparison. However, this yield edge comes with a caveat: SLYG has experienced a deeper maximum drawdown of -63.19% compared to IJT's -57.61% during the same period according to PortfolioLab data. While both ETFs exhibit similar volatility (5.15% for SLYG vs. 5.24% for IJT), SLYG's steeper decline underscores its slightly higher risk profile during market stress. That said, the two funds remain highly correlated (0.94), offering negligible diversification benefits if held together according to PortfolioLab analysis.

Sector Exposure: Near-Identical Portfolios with Nuanced Weightings

Both ETFs mirror the S&P SmallCap 600 Growth Index, with sector allocations concentrated in finance, health technology, and electronic technology. SLYG's finance sector weighting (23.38%) is marginally higher than IJT's (23.4%), while IJT tilts slightly toward health technology (10.91% vs. SLYG's 10.85%) according to ETFdb data. These differences are statistically immaterial for most investors but highlight the structural similarities between the two funds. For investors seeking thematic exposure, these nuances are unlikely to alter strategic allocations.

Actionable Recommendations: Prioritize Cost and Yield, Acknowledge Risk

For long-term investors, SLYG's lower expense ratio and superior dividend yield create a clear value proposition. The incremental cost savings and income generation, combined with adequate liquidity, make it a more efficient vehicle for capital appreciation. However, investors with a lower risk tolerance or those prioritizing maximum drawdown metrics might lean toward IJT. Given the near-identical sector exposures and performance, the decision ultimately hinges on fee sensitivity and income preferences.

In a market where small-cap growth stocks are often celebrated for their growth potential but criticized for volatility, SLYG's structural advantages offer a pragmatic edge. As always, investors should align their choices with their risk profiles and strategic goals-but in the SLYG vs. IJT debate, cost efficiency and yield tilt decisively toward the former.