S&P ETFs Trail Russell, CRSP Peers in Mid-Cap Race: CFRA

S&P Dow Jones Indices-linked exchange-traded funds tracking mid- and small-cap stocks have lagged behind competitors that follow Russell and CRSP benchmarks through July 22, according to research firm CFRA.

The iShares Core S&P Mid-Cap ETF (IJH) posted a 2.5% price return year to date, trailing the Vanguard Mid-Cap ETF (VO) at 8.2% and the iShares Russell Mid-Cap ETF (IWR) at 6.9% over the same period, according to the report. Similarly, the iShares Core S&P Small-Cap ETF (IJR) declined 2.1%, while the iShares Russell 2000 ETF (IWM) gained 1% and the Vanguard Small-Cap ETF (VB) climbed 1.9%.

Index Differences Explain Performance Divergence

The performance divergence stems from fundamental differences in how the indices define market-cap ranges, with S&P DJI indices tilting toward smaller companies while Russell and CRSP benchmarks capture relatively larger names that have benefited from the current mega-cap-driven market environment, according to CFRA.

Index methodology differences explain the performance gaps between fund families, according to the research. The S&P MidCap 400 targets companies in the $8 billion to $22 billion market-cap range, while the CRSP U.S. Mid Cap Index covers the 70th to 85th percentile of total U.S. market cap and the Russell Midcap Index includes companies ranked 201 to 1,000 by market capitalization.

Several top-performing stocks held by VO and IWR are absent from IJH's portfolio, according to CFRA data. Palantir Technologies Inc. (PLTR), Robinhood Markets Inc. (HOOD), Roblox Corp. (RBLX) and Coinbase Global Inc. (COIN) contributed the most to IWR's returns but are not held by IJH, according to the report.

The performance gap reflects broader market dynamics that favor larger companies since the 2022 equity market recovery, according to CFRA. Palantir was added to the S&P 500 in September 2024 but only dropped from the CRSP and Russell mid-cap indices in 2025, giving those funds extended exposure to the stock's gains.

S&P Small-Cap Funds Face Similar Challenges

The same pattern emerges in small-cap funds, where S&P-linked ETFs underperform due to their narrower constituent base and smaller market-cap tilt, according to the research. The CRSP U.S. Small Cap Index targets the 85th to 99.5th percentile of total market cap, while the S&P SmallCap 600 covers the 93rd- to 99th-percentile range.

Stocks like NRG Energy Inc. (NRG) and Jabil Inc. (JBL) contributed to VB's outperformance but are held in the S&P 500 rather than the S&P SmallCap 600, according to CFRA. This gives VB a "large-cap boost" that IJR lacks in the current market environment.

Looking ahead, CFRA notes that S&P DJI-linked ETFs could outperform if market conditions shift to favor smaller companies over mega-caps. The firm's analysis suggests the performance differential will persist as long as larger market-cap companies continue outperforming their smaller counterparts.