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Should SPDR S&P 600 Small Cap Growth ETF (SLYG) Be on Your Investing Radar?

Style Box ETF report for SLYG

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This story originally appeared on Zacks

Designed to provide broad exposure to the Small Cap Growth segment of the US equity market, the SPDR S&P 600 Small Cap Growth ETF (SLYG) is a passively managed exchange traded fund launched on 09/25/2000.

- Zacks

The fund is sponsored by State Street Global Advisors. It has amassed assets over $2.37 billion, making it one of the larger ETFs attempting to match the Small Cap Growth segment of the US equity market.

Why Small Cap Growth

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.

Qualities of growth stocks include faster growth rates compared to the broader market, as well as higher valuations and higher than average sales and earnings growth rates. Additionally, growth stocks have a greater level of risk associated with them. They are likely to outperform value stocks in strong bull markets but over the longer-term, value stocks have delivered better returns than growth stocks in almost all markets.

Costs

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.

Annual operating expenses for this ETF are 0.15%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 0.69%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Information Technology sector--about 20.80% of the portfolio. Industrials and Healthcare round out the top three.

Looking at individual holdings, Omnicell Inc. (OMCL) accounts for about 1.33% of total assets, followed by Saia Inc. (SAIA) and Chart Industries Inc. (GTLS).

The top 10 holdings account for about 10.64% of total assets under management.

Performance and Risk

SLYG seeks to match the performance of the S&P SmallCap 600 Growth Index before fees and expenses. The S&P SmallCap 600 Growth Index measures the performance of the small-capitalization growth sector in the U.S. equity market. The selection universe for the S&P SmallCap 600 Index includes all U.S. common equities listed on the NYSE, NASDAQ Global Select Market, NASDAQ Select Market and NASDAQ Capital Market with market capitalizations between $250 million and $1.2 billion.

The ETF has added roughly 19.20% so far this year and it's up approximately 44.65% in the last one year (as of 10/22/2021). In the past 52-week period, it has traded between $59.95 and $91.68.

The ETF has a beta of 1.17 and standard deviation of 28.64% for the trailing three-year period, making it a medium risk choice in the space. With about 336 holdings, it effectively diversifies company-specific risk.

Alternatives

SPDR S&P 600 Small Cap Growth ETF 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, SLYG is an outstanding option for investors seeking exposure to the Style Box - Small Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.

The iShares Russell 2000 Growth ETF (IWO) and the Vanguard SmallCap Growth ETF (VBK) track a similar index. While iShares Russell 2000 Growth ETF has $12.15 billion in assets, Vanguard SmallCap Growth ETF has $16.81 billion. IWO has an expense ratio of 0.24% and VBK charges 0.07%.

Bottom-Line

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they 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.



Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

 

SPDR S&P 600 Small Cap Growth ETF (SLYG): ETF Research Reports

 

Omnicell, Inc. (OMCL): Free Stock Analysis Report

 

Chart Industries, Inc. (GTLS): Free Stock Analysis Report

 

Saia, Inc. (SAIA): Free Stock Analysis Report

 

iShares Russell 2000 Growth ETF (IWO): ETF Research Reports

 

Vanguard SmallCap Growth ETF (VBK): ETF Research Reports

 

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