IWM vs IJR: Two Small-Cap Benchmarks, One Big Methodology Difference
Both funds own the small-cap segment of the US market. IWM takes essentially all of it, roughly 2,000 stocks including companies that lose money. IJR requires positive earnings before a stock can enter, holds about 600 names, and charges roughly a third of the fee. That single index rule has driven a persistent performance gap between the two indexes.
IWM (iShares Russell 2000 ETF) and IJR (iShares Core S&P Small-Cap ETF) come from the same issuer and cover the same market segment, so the differences are pure methodology. The Russell 2000 that IWM tracks admits nearly every small-cap stock, including a meaningful share of unprofitable companies. The S&P SmallCap 600 that IJR tracks requires positive earnings for inclusion, and studies attribute a historical performance edge of roughly 1 to 2 percentage points a year to that screen alone. IJR also charges 0.06% against IWM's 0.19%. What IWM offers in exchange is trading machinery: it is one of the most heavily traded ETFs in the world, with penny-wide spreads and the deepest options market in small caps. For a long-term holder, those are features you pay for and never use. For an active trader or options user, they are the entire point. Past performance does not guarantee future results.
Whether the lower-cost fund suits your situation depends on your existing holdings, account type, tax situation, and how you use each fund. This is a cost comparison, not a personalized recommendation.
Both funds trade commission-free at every major brokerage. Where to buy them →
📋 IWM vs IJR: Key Facts Side by Side
| Metric | IWM | IJR |
|---|---|---|
| Fund Name | iShares Russell 2000 ETF | iShares Core S&P Small-Cap ETF |
| Issuer | iShares | iShares |
| Tracks Index | Russell 2000 Index | S&P SmallCap 600 Index |
| Expense Ratio | 0.19% | 0.06% ✓ |
| Cost per $10K/yr | $19.00 | $6.00 |
| AUM | $78.0B | $102.6B |
| Holdings | 2,000 | 600 |
| Inception | 2000 | 2000 |
| 1-Year Return | +14.03% | +16.37% |
| 3-Year Return | +19.58% | +16.72% |
| 5-Year Return | +6.41% | +6.22% |
| Dividend Yield | 0.98% | 1.26% |
| Holdings Overlap | See holdings overlap → | |
| Avg Bid-Ask Spread | 0.01% | 0.01% |
AUM and returns updated Oct 7, 2026 from ETF BFF database; expense ratios verified against issuer filings. Returns are annualised. Not investment advice.
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📊 IWM vs IJR: Annualised Returns
Annualised returns (trailing, price-based). Past performance does not guarantee future results.
🎯 Which Fund Fits Which Investor?
- want broader diversification (2,000 holdings vs 600)
- want the lowest fees: saves ~$13/yr per $10K vs IWM
💰 What the Fee Difference Actually Costs
Adjust the numbers for your situation. This models each fund's expense ratio compounding against your balance over time.
Assumes a constant annual return reinvested, with each fund's expense ratio deducted yearly. Illustrative only; actual returns vary. Past performance does not guarantee future results.
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New to ETF investing? See answers to the most common ETF questions →