SPSM ETF offers cheaper, more profitable small-cap exposure than IWM with better long-term returns.

The SPDR Portfolio S&P 600 Small Cap ETF (SPSM) provides a lower-cost alternative to the iShares Russell 2000 ETF (IWM) for U.S. small-cap exposure. SPSM tracks an index that requires companies to be profitable, excluding unprofitable firms common in IWM's Russell 2000 index. This profitability screen and lower fees (0.03% vs. 0.19%) have led SPSM to outperform IWM over 1, 5, and 10 years. While IWM offers superior liquidity for traders, long-term investors may benefit from switching to SPSM, considering tax implications and portfolio goals.