IWM and IWO Provide Small-Cap Diversification, But One Offers More Growth Potential for Investors

6 days ago 10

Katie Brockman, The Motley Fool

Sun, December 14, 2025 astatine 10:35 AM CST 5 min read

IWM comes with a little disbursal ratio, broader diversification, and a higher dividend output than IWO.
IWO is much concentrated successful healthcare and exertion stocks, portion IWM tilts toward financials and holds astir doubly arsenic galore companies.
Over the past 5 years, IWM saw a smaller maximum drawdown than IWO.
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The iShares Russell 2000 ETF (NYSEMKT:IWM) stands retired for its little costs, higher yield, and broader diversification, whereas the iShares Russell 2000 Growth ETF (NYSEMKT:IWO) focuses much heavy connected growth-oriented small-cap stocks.

Both IWM and IWO way segments of the small-cap U.S. banal market, but IWM covers the afloat Russell 2000 Index, portion IWO zeroes successful connected the maturation subset. This examination highlights wherever the 2 diverge connected cost, performance, and risk.

Metric

IWO

IWM

Issuer	iShares	iShares
Expense ratio	0.24%	0.19%
1-yr instrumentality (as of Dec. 13, 2025)	9.83%	8.92%
Dividend yield	0.65%	0.97%
Beta (5Y monthly)	1.40	1.30
AUM	$13.2 billion	$72.5 billion

Beta measures terms volatility comparative to the S&P 500. The 1-yr instrumentality represents full instrumentality implicit the trailing 12 months.

IWM is much affordable connected fees with a little disbursal ratio than IWO. It besides offers a higher dividend yield, which whitethorn entreaty to investors seeking further income from their small-cap allocation.

Metric

IWO

IWM

Max drawdown (5 y)	-42.02%	-31.91%
Growth of $1,000 implicit 5 years	$1,212	$1,334

IWM holds 1,951 stocks, spanning U.S. small-cap companies crossed each sectors. While it's highly diversified, it has notable tilts toward healthcare (18%), financials (18%), and industrials (17%).

Its apical holdings are Bloom Energy, Credo Technology Group, and Fabrinet, each making up little than 1% of the fund’s full assets. With implicit 25 years connected the marketplace and nary notable quirks oregon analyzable overlays, IWM aims for broad, typical vulnerability to the small-cap universe.

IWO, by contrast, focuses connected the maturation conception of the Russell 2000, resulting successful a much concentrated portfolio. Its apical sectors see healthcare (25%), industrials (22%), and exertion (21%).

Its largest positions reflector IWM’s but astatine higher allocations, reflecting IWO's narrower focus. Investors seeking axenic maturation vulnerability whitethorn find IWO’s assemblage tilt and higher volatility notable, but it comes with less holdings and a much concentrated hazard profile.

For much guidance connected ETF investing, cheque retired the afloat usher astatine this link.

IWO and IWM some connection entree to small-cap stocks, but they disagree successful their goals and portfolio allocations.