Should Vanguard Small-Cap Index Fund ETF Shares (VB) Be on Your Investing Radar?

Launched on January 26, 2004, the Vanguard Small-Cap Index Fund ETF Shares (VB) is a passively managed exchange traded fund designed to provide a broad exposure to the Small Cap Blend segment of the US equity market.

The fund is sponsored by Vanguard. It has amassed assets over $70.63 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

Sitting at a market capitalization below $2 billion, small cap companies tend to be high-potential stocks compared to its large and mid cap counterparts, but come with 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

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for this ETF are 0.03%, making it the least expensive products in the space.

It has a 12-month trailing dividend yield of 1.31%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Industrials sector -- about 21.8% of the portfolio. Information Technology and Financials round out the top three.

Looking at individual holdings, Sandisk Corp (SNDK) accounts for about 1.06% of total assets, followed by Slcmt1142 and Rocket Lab Corp (RKLB).

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 return is roughly 1.78% so far this year and is up about 18.34% in the last one year (as of 03/19/2026). In the past 52-week period, it has traded between $193.73 and $279.93.

The ETF has a beta of 1.06 and standard deviation of 18.65% for the trailing three-year period, making it a medium risk choice in the space. With about 1328 holdings, it effectively diversifies company-specific risk.

Alternatives

Vanguard Small-Cap Index Fund ETF Shares 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 a great 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 $67.57 billion in assets, iShares Core S&P Small-Cap ETF has $90.74 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.

Bottom-Line

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they 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 Index Fund ETF Shares (VB): ETF Research Reports

This article originally published on Zacks Investment Research (zacks.com).

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