VBR vs. IJJ: Are Small-Cap or Mid-Cap Stocks the Better Choice for Value Investors?
Key Points
VBR carries a much lower expense ratio than IJJ and holds a broader basket of small-cap value stocks.
IJJ tilts more heavily toward financials and mid-cap companies, with slightly less volatility over five years.
Both ETFs offer comparable yields and have performed similarly over the past five years, but they differ in size and sector emphasis.
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The Vanguard Small-Cap Value ETF (NYSEMKT:VBR) and the iShares SP Mid-Cap 400 Value ETF (NYSEMKT:IJJ) both aim to give investors diversified access to U.S. value stocks, but their strategies diverge in the size of companies they target.
This comparison examines fees, returns, risk, portfolio construction, and other relevant factors to help investors decide which approach best aligns with their goals.
Snapshot (cost & size)
| Metric | VBR | IJJ |
|---|---|---|
| Issuer | Vanguard | iShares |
| Expense ratio | 0.05% | 0.18% |
| 1-yr return (as of Feb. 14, 2026) | 13.67% | 11.20% |
| Dividend yield | 1.85% | 1.72% |
| Beta (5Y monthly) | 1.11 | 1.12 |
| AUM | $62 billion | $8 billion |
Beta measures price volatility relative to the S&P 500. The 1-yr return represents total return over the trailing 12 months.
VBR is notably more affordable on fees with a lower expense ratio, and it also offers a marginally higher dividend yield. For cost-conscious investors, VBR’s lower fee may appeal, especially over longer holding periods.
Performance & risk comparison
| Metric | VBR | IJJ |
|---|---|---|
| Max drawdown (5 y) | -24.19% | -22.67% |
| Growth of $1,000 over 5 years | $1,464 | $1,497 |
Over the past five years, both funds have experienced similar maximum drawdowns, with IJJ showing slightly less downside. IJJ’s growth of $1,000 edges ahead of VBR for the period, though both landed in the same general range for long-term investors.
What's inside
IJJ tracks mid-cap U.S. companies that exhibit value traits, holding 305 stocks. The portfolio leans heavily into financial services (making up 23% of assets), with significant allocations to industrials and consumer cyclicals. Its largest holdings include US Foods, Reliance, and Toll Brothers. Each represents around 1% of assets, reflecting a fairly even distribution across its constituents.
VBR, in contrast, draws from a much broader universe of 845 small-cap value stocks, with the highest weights in financial services (19%), industrials (18%), and consumer cyclicals (13%). Its top names — NRG Energy, EMCOR Group, and Atmos Energy — each account for less than 0.75% of assets, underscoring its wide diversification and focus on smaller companies relative to IJJ.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
While both VBR and IJJ focus on value stocks, they differ in the sizes of companies they target.
VBR focuses on small-cap stocks, while IJJ targets mid-caps. This difference can affect the funds’ performance and risk profiles. Generally speaking, smaller companies tend to carry higher risk but have greater growth potential. Small-cap stocks, then, can be more volatile but also more lucrative than mid-caps.
Case in point: VDC has experienced a slightly steeper max drawdown over the last five years, but it’s also marginally outperformed IJJ in one-year total returns.
Aside from market cap differences, the two funds also diverge on size and diversification. VDC is much broader, holding nearly three times as many stocks as IJJ. Its top stocks also make up a slightly smaller proportion of the portfolio, which can help reduce single-stock risk. That diversification can help mitigate volatility, especially among small-cap stocks.
VDC can be the better choice for investors seeking diversified exposure to the small-cap value segment of the market, while IJJ can be a smart buy for those seeking slightly more stability with mid-cap stocks.
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Katie Brockman has positions in Vanguard Small-Cap Value ETF. The Motley Fool has positions in and recommends EMCOR Group. The Motley Fool has a disclosure policy.
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