Designed to provide broad exposure to the Small Cap Blend segment of the US equity market, the Vanguard Small-Cap ETF (VB) is a passively managed exchange traded fund launched on 01/26/2004.
The fund is sponsored by Vanguard. It has amassed assets over $62.34 billion, making it one of the largest ETFs attempting to match the Small Cap Blend segment of the US equity market.
Why Small Cap Blend
There's a lot of potential to investing in small cap companies, but with market capitalization below $2 billion, that high potential comes with even higher risk.
Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.
Costs
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.05%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.30%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Industrials sector--about 20.40% of the portfolio. Financials and Information Technology round out the top three.
Looking at individual holdings, Slcmt1142 accounts for about 1.13% of total assets, followed by Axon Enterprise Inc (AXON) and Smurfit Westrock Plc (SW).
Performance and Risk
VB seeks to match the performance of the CRSP US Small Cap Index before fees and expenses. The CRSP US Small Cap Index includes U.S. companies that fall between the bottom 2%-15% of the investable market capitalization. There is no lower limit in market capitalization. The index includes securities traded on NYSE, NYSE Market, NASDAQ or ARCA.
The ETF has gained about 0% so far this year and was up about 14.10% in the last one year (as of 01/02/2025). In the past 52-week period, it has traded between $204 and $261.58.
The ETF has a beta of 1.15 and standard deviation of 21.24% for the trailing three-year period, making it a medium risk choice in the space. With about 1387 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard Small-Cap ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, VB is an excellent option for investors seeking exposure to the Style Box - Small Cap Blend segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Russell 2000 ETF (IWM) and the iShares Core S&P Small-Cap ETF (IJR) track a similar index. While iShares Russell 2000 ETF has $72.47 billion in assets, iShares Core S&P Small-Cap ETF has $87.60 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.
Bottom-Line
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Vanguard Small-Cap ETF (VB): ETF Research Reports
iShares Russell 2000 ETF (IWM): ETF Research Reports
Axon Enterprise, Inc (AXON) : Free Stock Analysis Report
iShares Core S&P Small-Cap ETF (IJR): ETF Research Reports
Smurfit Westrock PLC (SW) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
