IWM Gets a New Rival

ETF Trends

With almost $23 billion in assets under management, the iShares Russell 2000 ETF (IWM) is not just one of the largest ETFs tracking small-cap stocks, it is one of the largest ETFs of any type. Heft in terms of assets is impressive, but it does not mean any ETF is immune from competition and IWM along with other large, established small-cap funds get a new rival Tuesday when the SPDR Russell 2000 ETF (TWOK) debuts.

State Street’s filing with the Securities and Exchange Commission for TWOK does not list an expense ratio for the new ETF, but IWM charges 0.24% per year. Rivals such as the Schwab U.S. Small Cap ETF (SCHA) and the Vanguard Small-Cap ETF (VB) charge 0.8% and 0.1%, respectively. [A Look at Small-Cap ETFs]

 

Assuming TWOK is a similar version of IWM in another sponsor’s clothing, investors can expect a sector breakdown that features a 24% weight to financials and a 15.1% allocation to consumer discretionary names. Technology, producer durables and consumer staples also receive double-digit allocations. [Small-Cap ETFs Offer Big Portfolio Benefits]

The introduction of TWOK is part of a previously announced plan by State Street’s (STT) State Street Global Advisors unit, the second-largest ETF sponsor, to rebrand some of its ETF’s using indexes from Russell Investments, reports Cinthia Murphy for Index Universe

Three other broader market SPDRs ETFs will take on Russell indexes that were previously used by ETFs issued by the index provider. Russell shuttered 25 of its ETFs last year, but some of those indexes have found homes at State Street. For example, the SPDR Russell 2000 Low Volatility ETF (SMLV) tracks an index previously linked to a Russell ETF. SMLV debuted in February and now has $9.5 million in assets. [Record Number of ETF Closures]

Despite the intense competition, TWOK’s timing could be good. IWM has seen year-to-date net inflows at $3.62 billion, according to data compiled by Index Universe. In the past 90 days, both IWM and SCHA are up more than 8.5%.

iShares Russell 2000 ETF

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IWM

ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of IWM and SCHA.

 

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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