Mid-Cap or Small-Cap Value: How IJJ and IWN Stack Up for Cost, Risk, and Returns

New York, Feb. 8, 2026 — Investors seeking value exposure through exchange-traded funds often consider company size alongside metrics such as cost, performance, and volatility. Two long-standing options from iShares illustrate how market-capitalization focus can influence an ETF’s profile. The iShares S&P Mid-Cap 400 Value ETF (NYSEMKT: IJJ) concentrates on mid-cap companies, while the iShares Russell 2000 Value ETF (NYSEMKT: IWN) targets small-cap stocks. A review of their fundamentals highlights the similarities and differences that may guide portfolio positioning.

Expense ratios and asset size

Both funds are passively managed and charge transparent fees, yet IJJ is marginally cheaper. The mid-cap product carries a 0.18% expense ratio, compared with 0.24% for IWN. On a $10,000 investment, that difference translates to an annual fee of $18 versus $24. Assets under management also vary: IWN oversees approximately $12.59 billion, while IJJ holds roughly $8.47 billion. The larger asset base of IWN can bolster liquidity, but both funds trade on major U.S. exchanges with established volume.

Recent performance and income

Over the 12 months ended Jan. 7, 2026, IWN delivered an 18.44% total return, outpacing IJJ’s 10.84%. Dividend yields, however, tilt in favor of the mid-cap strategy. IJJ distributes about 1.7% annually, slightly higher than IWN’s 1.53%. Yield differentials partly reflect sector composition and payout practices of the underlying companies. Investors pursuing regular income may view IJJ as incrementally more attractive, though both yields remain modest by historical value standards.

Portfolio construction

IJJ tracks the S&P Mid-Cap 400 Value Index and currently holds 311 securities. Financial services, industrials, and consumer cyclical names receive the largest weightings. Top positions include US Foods Holding Corp., Reliance, Inc., and aluminum producer Alcoa Corp., none of which exceed a low-single-digit share of total assets, preserving diversification.

IWN follows the Russell 2000 Value Index with 1,413 constituents, more than four times the count in IJJ. Its sector mix resembles the broader small-cap universe, with financials, industrials, and basic materials among the heaviest allocations. EchoStar Corp., Hecla Mining Company, and TTM Technologies, Inc. rank as the three largest holdings, yet each represents a small fraction of fund assets, underscoring the wide dispersion typical of small-cap mandates.

Risk measures

Market capitalization plays a central role in volatility. Over the past five years, IWN’s maximum drawdown reached –26.71%, compared with –22.68% for IJJ. The deeper trough for IWN aligns with the higher sensitivity often observed in smaller enterprises, which can face steeper revenue swings, financing constraints, or narrower competitive moats.

Growth of capital also diverged during the same period. A hypothetical $1,000 invested five years ago would have grown to $1,338 in IWN and $1,528 in IJJ. While past results do not guarantee future performance, the data illustrate how a less severe drawdown combined with mid-cap rebound potential produced stronger compounded returns for IJJ despite its lower one-year gain.

Beta, a measurement of price movement relative to the S&P 500 Index, further illustrates risk. Though precise figures are not included here, five-year weekly calculations generally show small-cap value strategies carrying higher betas than mid-caps. Investors can review beta statistics on fund provider websites or regulatory filings to gauge sensitivity to broad-market shifts. The U.S. Securities and Exchange Commission offers background on how market capitalization affects investment characteristics.

Historical context

Both ETFs launched more than two decades ago, providing extensive real-world track records through multiple market cycles. Longevity can be important when evaluating index methodologies, portfolio turnover, and sponsor commitment. Although neither fund has undergone significant structural change, periodic reconstitution of the underlying indexes updates sector and security weights, maintaining alignment with the targeted value characteristics.

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Key considerations for allocation

1. Cost sensitivity: Investors focused on minimizing expenses may lean toward IJJ, whose fee advantage, while modest in percentage terms, compounds over long horizons.

2. Income needs: A slightly higher dividend yield from IJJ offers incremental cash flow, though overall payouts are broadly similar.

3. Risk tolerance: Small-cap equities historically exhibit sharper price swings. Those comfortable with higher volatility—and the possibility of larger upside—may prefer IWN. Conversely, mid-caps have sometimes been viewed as a middle ground between small-cap growth potential and large-cap stability.

4. Diversification goals: IWN’s broader roster spreads exposure across more companies and industries. Investors aiming to capture a wide slice of the small-cap value spectrum may regard this breadth as beneficial.

5. Return objectives: Recent one-year data favor IWN, yet five-year performance demonstrates IJJ’s resilience. Time horizon will influence which track record appears more relevant.

Bottom line

Both IWN and IJJ fulfill their mandates of providing value exposure in different segments of the U.S. equity market. Selection ultimately hinges on an investor’s appetite for cost efficiency, dividend income, diversification breadth, and tolerance for volatility associated with company size. Close attention to each factor can help align the chosen fund with overall portfolio strategy.

Crédito da imagem: The Motley Fool