A magnetic sensor assembly includes first and second shields each comprised of a magnetic material. The first and second shields define a physical shield-to-shield spacing. A sensor stack is disposed between the first and second shields and includes a seed layer adjacent the first shield, a cap layer adjacent the second shield, and a magnetic sensor between the seed layer and the cap layer. At least a portion of the seed layer and/or the cap layer comprises a magnetic material to provide an effective shield-to-shield spacing of the magnetic sensor assembly that is less than the physical shield-to-shield spacing.