VBR vs. SLYV: Why VBR's Lower Fees and Broader Diversification Give it The Edge
Key Points
Vanguard Small-Cap Value ETF charges a lower expense ratio and manages a much larger asset base than State Street SPDR S&P 600 Small Cap Value ETF
VBR has delivered stronger 1-year and 5-year total returns with slightly less historical drawdown
Both funds tilt toward industrials and financials, but VBR holds considerably more stocks
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Vanguard Small-Cap Value ETF (NYSEMKT:VBR) stands out for its lower fees, broader portfolio, and higher returns. State Street SPDR S&P 600 Small Cap Value ETF (NYSEMKT:SLYV) offers a marginally higher yield and a more concentrated basket.
Both VBR and SLYV aim to capture the U.S. small-cap value segment, but the funds differ in size, cost, and how broadly they spread their bets. For investors comparing these two popular small-cap value options, understanding their structure, performance, and sector makeup could clarify which may better fit particular goals.
Snapshot (cost & size)
VBR is more affordable on fees, charging just 0.07% compared to SLYV’s 0.15%. Both pay similar dividend yields, and VBR's returns are higher.
| Metric | SLYV | VBR |
|---|---|---|
| Issuer | SPDR | Vanguard |
| Expense ratio | 0.15% | 0.07% |
| 1-yr return (as of Dec. 30, 2025) | 3.1% | 5.0% |
| Dividend yield | 2.1% | 2.0% |
| Beta | 1.0 | 1.0 |
| AUM | $4.1 billion | $59.6 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year weekly returns. The 1-yr return represents total return over the trailing 12 months.
Performance & risk comparison
| Metric | SLYV | VBR |
|---|---|---|
| Max drawdown (5 y) | 28.68% | 24.19% |
| Growth of $1,000 over 5 years | $1,545 | $1,672 |
What's inside
Vanguard's VBR tracks the CRSP US Small Cap Value Index, using a full-replication strategy. It has been in the market for around 22 years. It holds 840 stocks, with a wide spread across industrials (22%), financial services (20%), and consumer discretionary (14%). Its largest positions are NRG Energy (NYSE:NRG), Sandisk (NASDAQ:SNDK), and EMCOR Group (NYSE:EME). Each makes up less than 1% of the portfolio, helping avoid concentration risk.
State Street's SLYV also focuses on on small cap companies, tracking the S&P SmallCap 600 Value Index. It holds over 460 companies and its composition leans toward financials (23%), consumer discretionary (17%), and industrials (14%). Its top holdings are LKQ (NASDAQ:LKQ), Lincoln National (NYSE:LNC) and Jackson Financial (NYSE:JXN). Making up just over 1% of the fund's holdings, they are slightly more prominent.
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What this means for investors
These are two very similar funds that give investors exposure to U.S. small cap companies. VBR has the edge in past performance and fees. It has generated higher returns than SLYV in the past year and five years. Its expense ratio is more than half that of SLYV.
Past performance aside, it's allocation and company size that really set these two apart. VBR has more exposure to industrials and utilities while SLYV has more exposure to consumer discretionary and technology.
In terms of size, the CRSP US Small Cap Value Index, which VBR tracks, includes companies with market caps from $340 million to around $31 billion, with a median of $4.0 billion. The market caps of companies in the S&P SmallCap 600 Value Index, used by SLYV, range from around $250 million to $11 billion, with a median of $1.9 billion.
Investing in small-cap companies can bring more volatility and different risks from medium to large-caps. As such, the higher median market cap and broad diversification of VBR through its sheer number of companies may appeal. It also has significantly more assets under management, which can contribute to stability and liquidity.
However, investors need to consider how small they want to go -- and what types of small caps they want to get exposure to. If you're looking for a more focused ETF that contains companies with lower market caps, SLYV may worth the slightly higher fees.
Glossary
Expense ratio: The annual fee, expressed as a percentage of assets, that a fund charges to cover operating costs.
Asset base (AUM): Assets under management; the total market value of all assets a fund manages.
Small-cap value: Stocks of smaller companies considered undervalued based on financial metrics like price-to-earnings or price-to-book ratios.
Dividend yield: Annual dividends paid by a fund or stock, expressed as a percentage of its current price.
Beta: A measure of an investment's volatility compared to the overall market, typically the S&P 500.
Max drawdown: The largest observed percentage drop from a fund’s peak value to its lowest point over a specific period.
Full-replication strategy: An index fund approach where the fund holds every security in the benchmark index in the same proportion.
Concentration risk: The risk of losses due to a large portion of assets being invested in a small number of holdings.
Sector makeup: The breakdown of a fund’s investments by industry or economic sector.
Index: A group of securities representing a particular market segment, used as a benchmark for fund performance.
Growth of $1,000: The increase in value of a $1,000 investment over a specified period, including returns.
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Emma Newbery has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends EMCOR Group. The Motley Fool recommends LKQ. The Motley Fool has a disclosure policy.
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