What IJR actually is

IJR tracks the S&P SmallCap 600, an index of smaller US companies. Unlike some other small-cap indexes, it requires companies to be profitable to be included, which filters out some of the weakest names.

What is inside

Companies in industrials, financials, consumer, health care and technology, with a market value far smaller than the large caps in an S&P 500 fund. Many are regional or specialized businesses.

Distributions

IJR pays dividends quarterly, but the yield is modest. Small companies tend to keep more profit to grow, so it is not the first place to look for income.

What to keep in mind

  • Bigger swings. Small caps fall more in recessions.
  • Interest-rate sensitivity. Many carry more debt.
  • Long stretches of lagging. Small caps can trail large caps for years.

Quick take

IJR is a cheap way to add small-company exposure with a profitability screen, for growth and diversification rather than income.