What Is the S&P 600?

If the stock market were a giant high school, the S&P 500 would be the seniors with parking passes and brand-new hoodies, while the
S&P SmallCap 600 is the scrappy underclassmen club that actually shows up early, volunteers for everything, and still manages to
surprise everyone at the pep rally.

In plain English: the S&P 600 is a U.S. stock market index designed to measure the performance of
small-cap American companiesbut with a twist. It isn’t just “the smallest companies we could find.” It’s “small companies that meet
specific size, liquidity, and financial viability standards.” In other words, it’s small-cap exposure with a bit of a quality filter.

The quick definition (with zero mystery jargon)

The S&P 600 tracks roughly 600 publicly traded U.S. companies that fall into the small-cap range. It’s built and maintained by
S&P Dow Jones Indices. The index is meant to be a benchmarksomething investors and fund managers can use to answer:
“How are small-cap stocks doing?”

And because it’s a benchmark, you typically don’t “buy the index” directly. You use an ETF or index fund that aims to track itkind of like streaming
the game instead of trying to personally recruit 600 players onto your backyard team.

What the S&P 600 measures (and what it doesn’t)

It measures the small-cap slice of U.S. stocks

“Small-cap” generally refers to smaller publicly traded companiesoften earlier in their growth journey, often more sensitive to the economy, and often
more volatile than large-cap stocks. The S&P 600 focuses on that small-cap segment specifically.

It’s part of a bigger family: the S&P Composite 1500

One helpful way to understand the S&P 600 is to picture it as one building block in a three-piece set:
S&P 500 (large-cap) + S&P MidCap 400 (mid-cap) + S&P SmallCap 600 (small-cap).
Together, these make up the S&P Composite 1500. That design matters because the S&P 600 is intended to be
mutually exclusive from the S&P 500 and S&P 400so you’re not accidentally double-counting the same company in multiple size buckets.

It does not include every small company

The S&P 600 is not “the entire small-cap universe.” It is a selected set of companies that meet specific inclusion rules. So it’s best viewed as
a curated small-cap benchmark, not a complete census of every small company listed in the U.S.

How a company gets into the S&P 600 (aka “the guest list”)

Index membership isn’t random, and it isn’t a popularity contest (sorry, prom king). The S&P 600 uses multiple criteria intended to ensure the index
is investable and financially viablenot just “small.”

1) Size: market-cap guidelines (and yes, they move over time)

To be added, a company generally needs to fall within the index’s small-cap market capitalization range. These thresholds are updated from time to time
to reflect market conditions. For example, S&P Dow Jones Indices updated the market-cap eligibility guidelines effective July 1, 2025, including a
small-cap addition range of $1.2 billion to $8.0 billion (unadjusted company market capitalization), and noted the ranges are reviewed
at the beginning of each calendar quarter and updated as needed.

One important nuance: these market-cap thresholds are primarily for additionsa company isn’t automatically kicked out the moment it drifts
above or below the entry range. Index providers typically consider ongoing eligibility and broader index maintenance factors, not just a single snapshot.

2) U.S. company requirement

The S&P 600 is a U.S. equity index, so constituents must be U.S. companies. That’s part of why it’s often used as a lens on “domestic” smaller firms
relative to mega-cap multinationals.

3) Public float and “investability”

“Float” is the portion of shares that are actually available for public trading (not locked up with insiders or strategic holders). The S&P 600 uses a
float-adjusted approach and includes minimum thresholds designed to ensure the index reflects shares investors can realistically buy and sell.
You’ll often see this referenced through concepts like an investable weight factor (IWF).

4) Profitability / financial viability: the S&P 600’s famous filter

Here’s the part that gets the S&P 600 invited to a lot of finance podcasts: it has an earnings screen.
A commonly cited requirement is positive as-reported earnings in the most recent quarter and
positive earnings over the most recent four quarters combined. This filter aims to screen out companies that are small
and consistently unprofitablebecause while hope is a strategy in movies, it’s a shaky strategy for an index.

5) Liquidity requirements: can people actually trade these stocks?

Small caps can be thinly traded, which can mean wider bid-ask spreads and more price jumps. The S&P 600 includes liquidity rules intended to reduce that
problem. You’ll see references to measures like trading volume minimums and ratios that compare a stock’s dollar trading value to its float-adjusted market cap.
The goal: keep the index reasonably investable for funds that track it.

6) Sector representation and index committee decisions

Unlike some indexes that are purely “rules-only,” S&P’s U.S. size indexes are commonly described as committee-maintained with an eye toward sector balance
and overall index objectives. That doesn’t mean the committee is day-trading your retirementmore like it’s maintaining a roster so the index stays
representative and investable.

How the S&P 600 is constructed: weighting, rebalancing, and maintenance

Float-adjusted market-cap weighting

The S&P 600 is generally float-adjusted market capitalization weighted. Translation: bigger companies (by tradable market value) carry more
weight, and smaller companies carry less. It’s not equal-weighted by default.

Quarterly rebalancing (the routine tune-up)

The index is rebalanced quarterlycommonly in March, June, September, and December. Rebalancing helps keep weights aligned with the methodology
(for example, float adjustments and share count changes).

Ongoing adds/drops and the “promotion” effect

One fun real-world detail: companies can migrate between S&P size buckets. If a small-cap company grows into a mid-cap profile, it may eventually be moved
into the S&P MidCap 400. If it becomes a large-cap heavyweight, it might end up in the S&P 500. Likewise, companies can move the other direction due to
mergers, acquisitions, delistings, or changes in eligibility.

This “promotion and relegation” vibe is one reason index changes get attention: when a stock is added to an index, index funds tracking that index often need to
buy it, which can temporarily affect trading dynamics.

S&P 600 vs. Russell 2000: same neighborhood, different house rules

The S&P 600 and the Russell 2000 are both commonly used small-cap benchmarks, and people love comparing them. But they’re not identical in what they’re
trying to capture.

The profitability difference

A major headline distinction: the S&P 600’s earnings requirement may lead to a different mix of companies than broader small-cap benchmarks.
This is sometimes framed as a “quality tilt” because consistently unprofitable companies may be excluded.

Selection and maintenance approach

Another difference is how the index is maintained (rules-only vs. committee oversight, reconstitution style, and so on). In practice, this can affect turnover,
sector exposures, and how quickly the index reflects certain market shifts.

What it can mean for investors

In some market environments, a profitability screen can help reduce exposure to the most fragile companies. In other environmentsespecially risk-on ralliesmore
speculative, unprofitable small caps can surge and leave “quality-screened” approaches looking more cautious.

Why investors pay attention to the S&P 600

Diversification away from mega-cap concentration

Many broad U.S. equity portfolios end up heavily influenced by the biggest companies, especially when mega-cap tech is dominating headlines. Adding small caps can
broaden exposure across more industries and business models.

Economic sensitivity (small caps can be more “local weather”)

Smaller firms are often more tied to U.S. economic conditions, credit availability, and consumer cycles. That can be a feature if you want your portfolio to
participate in domestic growthbut it’s also why small caps can get tossed around when interest rates move or economic expectations change.

Long-term growth potential (with a seatbelt)

The classic case for small caps is growth potential: smaller companies may have more room to expand than mature giants. The S&P 600 tries to access that
growth potential while also requiring a basic level of financial viability.

How to invest in the S&P 600 (without building a 600-stock spreadsheet)

ETFs that track the S&P 600

The most common way to get S&P 600 exposure is through an ETF that aims to track the index. One widely used example is
iShares Core S&P Small-Cap ETF (IJR), which states that it seeks to track the investment results of an index composed of small-cap U.S.
equities. Other providers also offer S&P 600-linked ETFs, including funds from SPDR and Vanguard.

When comparing ETFs, investors usually look at things like expense ratio, tracking difference, liquidity (trading volume/spreads), and how the fund handles
dividends and rebalancing. Small differences can matter over timeespecially if you plan to hold for years.

Index mutual funds

Some investors prefer mutual funds for automatic investing features (like recurring purchases). If you’re investing through a retirement plan, you might also see
small-cap index options that approximate S&P 600 exposure or track a different small-cap benchmark entirely. Always check the fund’s benchmark namesmall-cap
is a category, not a single index.

Options and futures (advanced; most people can skip)

There are derivatives tied to small-cap benchmarks, but these tools are complex and can amplify risk. For most long-term investorsespecially newer investorsthe
simplest route is a diversified fund approach rather than leveraged products.

Risks and limitations (because every dessert has calories)

Higher volatility

Small-cap stocks typically move more than large capsup and down. That’s normal, but it can feel dramatic if you check your portfolio every 14 seconds.

Liquidity and trading costs

Even with liquidity screens, small-cap stocks can trade with wider spreads than mega-caps. That can show up as slightly higher “hidden costs” when entering or
exiting positions, and it can contribute to tracking error in funds that follow the index.

Interest-rate sensitivity

Smaller companies may rely more on borrowing and can be more sensitive to interest-rate changes. Rising rates can raise financing costs and pressure margins,
while falling rates can provide relief.

Not the whole small-cap world

Because it’s curated, the S&P 600 may behave differently than broader small-cap measures. If your goal is “every small cap, no questions asked,” another
benchmark might fit that goal better. If your goal is “small caps, but with basic financial viability,” the S&P 600 is built for that.

FAQ: fast answers

Is the S&P 600 the same thing as the S&P 500?

Nope. The S&P 500 covers large-cap U.S. companies. The S&P 600 focuses on small-cap companies.

Does the S&P 600 include only 600 stocks?

It’s designed for roughly 600 constituents, but the count can vary slightly around that number depending on index maintenance.

Why do people talk about the S&P 600’s “quality”?

Because the index uses profitability/financial viability requirements that can reduce exposure to persistently unprofitable companies compared with some other
small-cap benchmarks.

Conclusion: the small-cap benchmark with standards

The S&P 600 is a small-cap U.S. stock index designed to represent smaller public companies that meet defined size, liquidity, float, and
profitability criteria. It’s also a key building block in the S&P familyalongside the S&P 500 and S&P MidCap 400forming the S&P Composite 1500.

If you want small-cap exposure that’s still meant to be investable (and not purely “anything that’s tiny and breathing”), the S&P 600 is one of the most
widely referenced benchmarks. Just remember: small caps can be bumpy. The potential upside is real, but so is the rollercoaster. Strap in accordingly.

Real-World Experiences With the S&P 600 (Extra ~)

People don’t experience the S&P 600 the way they experience a movie (“10/10, would cry again”). They experience it the way you experience weather:
sometimes it’s sunny and you forget it exists, and sometimes it throws a surprise thunderstorm right when you wore white sneakers.

A common first experience is simply watching how differently small caps move compared with large caps. Someone might hold an S&P 500 fund
for months and feel like the portfolio is “mostly calm,” then add a small-cap allocation and suddenly notice bigger swings on ordinary news days. That’s not
necessarily a sign something is wrongit’s often just the nature of smaller companies, which can be more sensitive to interest rates, credit conditions,
consumer confidence, and earnings surprises.

Another very real experience is learning that “small-cap” isn’t one single personality. Some investors expect small caps to be all
early-stage tech moonshots. Then they look under the hood of the S&P 600 and realize it includes plenty of industrial, financial, consumer, and niche
business-to-business companies. That discovery can be reassuring (“Oh, this is more ‘real economy’ than I thought”) or surprising (“Waitwhy is this bank in
my small-cap ETF?”). Either way, it’s a good reminder that an index is a rule-based snapshot of a market segment, not a curated theme park ride.

Many long-term investors also experience the S&P 600 through rebalancing discipline. For example, someone sets a target like “80% broad
U.S. stocks, 20% small caps.” Then a strong small-cap run pushes that 20% to 27%. The investor’s real-world lesson: you either rebalance (sell a bit of what
ran up and buy what lagged) or you silently drift into a different portfolio than you intended. The index itself rebalances on its schedule, but your
personal allocation won’t rebalance itself unless you do it intentionally.

There’s also the experience of tracking difference, which is the polite finance term for “Why doesn’t my ETF match the index perfectly?”
Investors often notice tiny gaps between an ETF’s return and the index’s return, especially over shorter windows. The usual causes are boring-but-real:
fund expenses, trading costs, dividend timing, and how the fund handles index changes. For many people, that “gap” becomes a practical education in how indexes
are theoretical constructs and funds are real-world vehicles that must trade in real markets with real frictions.

Finally, a lot of people experience the S&P 600 as a patience test. Small caps can spend long stretches trailing large caps. Then, when
market leadership rotates, small caps can rally hard and fast. Investors who stick with a small-cap allocation often describe it as a “long game” holding:
not something you add because you want fireworks by next Tuesday, but something you add because you want broader exposure and you can tolerate volatility along
the way. (If you can’t tolerate volatility, small caps won’t politely stop being volatile just because you asked nicely.)

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