Vanguard VBR vs. iShares IJJ: Is a Small-Cap or Mid-Cap ETF the Better Buy for Investors?
Key Points
VBR offers a significantly lower expense ratio of 0.05% compared to the 0.18% fee for IJJ.
While both funds target value stocks, VBR focuses on smaller companies, while IJJ targets the mid-cap space.
VBR has shown stronger recent performance, though it experienced a slightly deeper maximum drawdown over the past five years.
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Both the iShares S&P Mid-Cap 400 Value ETF (NYSEMKT:IJJ) and the Vanguard Small-Cap Value ETF (NYSEMKT:VBR) provide targeted exposure to U.S. equities with value characteristics, but they operate in different segments of the market capitalization spectrum.
While IJJ focuses on mid-sized companies, VBR casts a wider net across the small-cap landscape, offering distinct risk-reward profiles for value-oriented portfolios seeking diversification.
Snapshot (cost & size)
| Metric | IJJ | VBR |
|---|---|---|
| Issuer | iShares | Vanguard |
| Expense ratio | 0.18% | 0.05% |
| 1-yr return (as of June 21, 2026) | 22.0% | 27.5% |
| Dividend yield | 1.65% | 1.76% |
| Beta (5Y monthly) | 1.02 | 1.01 |
| Assets under management (AUM) | $8.5 billion | $35.6 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
VBR is the more affordable option with an expense ratio of 0.05%, which is significantly lower than the 0.18% fee charged by IJJ. The Vanguard fund also offers a slightly higher trailing-12-month distribution yield, appealing to income-focused investors.
Performance & risk comparison
| Metric | IJJ | VBR |
|---|---|---|
| Max drawdown (5 yr) | -22.7% | -24.2% |
| Growth of $1,000 over 5 years (total return) | $1,551 | $1,566 |
What's inside
VBR tracks the CRSP US Small Cap Value Index, providing a deeply diversified portfolio of 835 holdings. Its largest positions include Flex, Jabil, and Tapestry, and its sector exposure is led by industrials, financial services, and consumer cyclical.
IJJ offers a more concentrated approach with 300 holdings focused on the mid-cap segment. Top holdings include SYNNEX, Reliance Steel & Aluminum, and US Foods, and its portfolio leans toward financial services, industrials, and consumer cyclical.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
IJJ and VBR can both provide extra diversification for a well-balanced portfolio, covering the mid-cap and small-cap markets, respectively.
The primary advantage of small-cap stocks is greater growth potential. Though the difference is subtle, VBR has slightly outperformed IJJ in both one- and five-year total returns. However, that’s also come with slightly higher volatility, as this fund has also experienced a marginally more severe max drawdown.
Mid-cap stocks offer a middle ground between small-cap and large-cap stocks. While they can be more volatile than large-caps, they generally offer more stability than small-caps.
The choice between IJJ and VBR may come down to gaps in your specific portfolio. VBR offers well-diversified exposure to the broader small-cap market, while IJJ focuses on mid-cap stocks. Both ETFs can be smart investments that play different roles in your portfolio.
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Katie Brockman has positions in Vanguard Small-Cap Value ETF. The Motley Fool recommends Flex and Tapestry. The Motley Fool has a disclosure policy.
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