RZG and SLYG both target small-cap growth stocks, but differ sharply in fees, diversification, and risk. See how their expense ratios, sector weights, and recent returns stack up before choosing a fund for your portfolio
Investors looking to tap into the growth potential of small-cap U.S. stocks have a range of exchange-traded funds (ETFs) to choose from, but not all small-cap growth funds are built the same. Two prominent options-Invesco S&P SmallCap 600 Revenue ETF (RZG) and State Street SPDR S&P 600 Small Cap Growth ETF (SLYG)-offer distinct approaches to portfolio construction, cost, and risk. Understanding these differences is essential for investors aiming to match their fund selection with their risk tolerance, return expectations, and long-term strategy.
While both funds focus on companies in the S&P SmallCap 600 Index with growth characteristics, their methodologies diverge. SLYG tracks a traditional growth index, spreading its assets across a broad swath of 350 holdings. RZG, on the other hand, uses a revenue-weighted approach, concentrating on 126 stocks that meet specific growth criteria. This difference in construction leads to meaningful variations in sector exposure, portfolio concentration, and performance outcomes.
Expense Ratios and Cost Impact
One of the most immediate differences between SLYG and RZG is their expense ratios. SLYG charges 0.15% annually, while RZG's fee is more than double at 0.35%. Over time, these costs can significantly affect net returns, especially for long-term investors. Lower fees mean more of your investment stays in the market, compounding over the years. For cost-conscious investors, this gap is not trivial-especially when compounded over a decade or more of holding.
Asset size also reflects investor preference for lower-cost options. As of July 17, 2026, SLYG manages $5.2 billion in assets, compared to RZG's $135.9 million. Larger funds often benefit from greater liquidity and tighter bid-ask spreads, which can further reduce trading costs for investors.
Portfolio Construction and Sector Exposure
SLYG's broad diversification across 350 stocks helps reduce single-stock risk and smooths out volatility. Its largest sector allocations are industrials (19.0%), technology (17.7%), and healthcare (17.2%). The fund's top holdings, such as Formfactor, Viasat, and Brightspring Health Services, each make up less than 1.5% of the portfolio, limiting the impact of any one company's performance.
RZG, by contrast, is more concentrated, with only 126 holdings and a heavier tilt toward healthcare (25.1%), followed by technology (17.3%) and industrials (16.4%). Its largest positions, including ACM Research (3.7%), Powell Industries (2.0%), and Argan (2.0%), carry more weight in the portfolio. This structure can amplify gains during strong market periods but also increases vulnerability to sharp declines if a few holdings underperform.
Performance, Drawdown, and Yield
Recent performance highlights the trade-offs between these two approaches. Over the 12 months ending July 17, 2026, RZG delivered a total return of 34.14%, outpacing SLYG's 27.31%. However, over the past five years, both funds produced similar cumulative growth: $1,000 invested in SLYG grew to $1,457, while the same amount in RZG reached $1,435. The difference in risk is more pronounced-RZG experienced a maximum drawdown of 38.33% over five years, compared to SLYG's 29.17%. This means RZG investors faced steeper losses during market downturns.
Dividend yields also differ. SLYG offers a yield of 0.64%, slightly higher than RZG's 0.42%. While neither fund is designed for income, the difference may matter for investors seeking some level of cash flow from their holdings. Beta, a measure of volatility relative to the overall market, is similar for both funds: 1.08 for SLYG and 1.04 for RZG, indicating both are somewhat more volatile than the broader market.
Choosing Based on Risk and Strategy
The decision between SLYG and RZG comes down to an investor's priorities. Those seeking lower costs, broader diversification, and a slightly higher yield may find SLYG more appealing as a core holding. Investors willing to accept higher volatility and greater concentration in pursuit of stronger short-term gains might prefer RZG, especially if they believe its revenue-weighted approach will outperform in certain market environments.
For context, the average expense ratio for U.S. equity ETFs was 0.16% in 2025, according to the Investment Company Institute. SLYG's fee is in line with this average, while RZG's is notably higher. Both funds' five-year returns are close to the S&P SmallCap 600 Growth Index's performance over the same period, underscoring the importance of cost and risk management in fund selection.
When evaluating small-cap growth ETFs, investors should weigh not just recent returns but also the underlying construction, sector tilts, and fee structure. Concentrated funds like RZG can deliver outsized gains in strong markets but may expose investors to sharper losses during downturns. Broader funds such as SLYG offer more stability but may lag during periods when a handful of stocks drive market gains. Ultimately, the right choice depends on your investment horizon, risk tolerance, and the role you want small-cap growth to play in your overall portfolio.
