Launched on September 25, 2000, the SPDR S&P 600 Small Cap Growth ETF (SLYG) is a passively managed exchange-traded fund designed to provide broad exposure to the small cap growth segment of the U.S. equity market.
The fund is sponsored by State Street Global Advisors. With over $2.2 billion in assets, he is one of the largest ETFs to rival the small cap growth segment of the US stock market.
Reasons for small-cap growth
There is a lot of potential in investing in small-cap stocks, but with market caps below $2 billion, the high potential comes with even higher risks.
Growth stock attributes include faster growth rates compared to the broader market, as well as higher valuations and higher than average sales and earnings growth. Growth stocks are also a class of stocks that are riskier than other stocks. Growth stocks are likely to outperform value stocks in bull markets, but value stocks have a record of providing better returns than growth stocks in almost every market.
cost
Investors should also pay attention to the ETF’s expense ratio. Assuming all other metrics are equal, low-cost products produce better results than high-cost products.
With an annual operating fee of 0.15%, this ETF is one of the cheapest offerings in the industry.
The 12-month trailing dividend yield is 1.19%.
Sector exposure and top holdings
While there are many benefits to this type of fund, such as diversified exposure that minimizes the risk of single stocks, it is important to take a closer look at ETF holdings before investing. And most ETFs are very transparent products, disclosing their holdings daily.
This ETF has the largest allocation to the Information Technology sector, accounting for approximately 19.80% of the portfolio. Industry and Healthcare round out the top three.
Looking at individual holdings, Exlservice Holdings Inc. (EXLS) accounts for about 1.35% of total assets, followed by Sm Energy Company (SM) and Ufp Industries Inc. (UFPI).
The top 10 stocks account for approximately 11.6% of total assets under management.
performance and risk
SLYG seeks to match the performance of the S&P SmallCap 600 Growth Index to the performance before fees and expenses. The S&P SmallCap 600 Growth Index measures the performance of small-cap growth sectors in the U.S. equity market. The selection universe of the S&P SmallCap 600 Index includes all U.S. common stocks with market caps between $250 million and $1.2 billion listed on the NYSE, Nasdaq Global Select Market, Nasdaq Select Market, and Nasdaq Capital Market. included.
The ETF is down about -0.26% so far this year and is down about -21.92% over the past year (as of 4 January 2023). Over the past 52 weeks, it has traded between $67.45 and $91.22.
The ETF’s beta is 1.11, with a standard deviation of 31.13% over the past three years, making it a medium-risk option in this space. It holds approximately 339 shares and effectively spreads company-specific risks.
Alternative proposal
The SPDR S&P 600 Small Cap Growth ETF has a Zacks ETF Rank of 3 (Hold). This is based on factors such as expected returns, expense ratios and momentum for the asset class. SLYG is therefore a reasonable option for those seeking exposure to the Style Box – Small Cap Growth area of the market. Investors may also want to consider his other ETF options in this space.
The iShares Russell 2000 Growth ETF (IWO) and Vanguard SmallCap Growth ETF (VBK) track similar indices. The iShares Russell 2000 Growth ETF has $9.44 billion in assets, while the Vanguard SmallCap Growth ETF has $11.83 billion in assets. IWO’s expense ratio is 0.23% and VBK’s fee is 0.07%.
bottom line
Retail and institutional investors are increasingly turning to passively managed ETFs, which offer low cost, transparency, flexibility and tax savings. This kind of fund is also a great vehicle for long-term investors.
Visit the Zacks ETF Center to learn more about this and other ETFs, select products that match your investment objectives, and read articles on the latest developments in the ETF investment universe.
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SPDR S&P 600 Small Cap Growth ETF (SLYG): ETF Research Report
UFP Industries, Inc. (UFPI) : Free Inventory Analysis Report
SM Energy Company (SM) : Free Stock Analysis Report
ExlService Holdings, Inc. (EXLS): Free Stock Analysis Report
iShares Russell 2000 Growth ETF (IWO): ETF Research Report
Vanguard SmallCap Growth ETF (VBK): ETF Research Report
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