2 Ways to Buy Undervalued American Companies: VBR vs. IJJ
Key Points
Vanguard Small-Cap Value ETF provides exposure to a broader basket of holdings at a significantly lower expense ratio than iShares S&P Mid-Cap 400 Value ETF.
Vanguard Small-Cap Value ETF outperformed iShares S&P Mid-Cap 400 Value ETF on a total return basis over the last year and five years.
iShares S&P Mid-Cap 400 Value ETF maintains a higher concentration in mid-cap financial services companies compared to the more diversified Vanguard small-cap portfolio.
- 10 stocks we like better than iShares Trust - iShares S&P Mid-Cap 400 Value ETF ›
The primary differences between Vanguard Small-Cap Value ETF (NYSEMKT:VBR) and iShares S&P Mid-Cap 400 Value ETF (NYSEMKT:IJJ) center on market-cap focus, with IJJ targeting mid-caps while VBR provides broader small-cap exposure at a lower cost.
Both funds target domestic "value" stocks -- companies trading at lower price multiples than the broader market. While VBR captures small-capitalization names, IJJ focuses on the mid-cap space. Choosing between them often depends on an investor's desired exposure to specific company sizes and sensitivity to management fees.
Snapshot (cost & size)
| Metric | VBR | IJJ |
|---|---|---|
| Issuer | Vanguard | iShares |
| Expense ratio | 0.05% | 0.18% |
| 1-yr return (as of April 27, 2026) | 31.90% | 26.50% |
| Dividend yield | 1.80% | 1.70% |
| Beta | 0.98 | 0.98 |
| AUM | $60.7 billion | $8.5 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.
Vanguard Small-Cap Value ETF is the more affordable option, featuring a significantly lower expense ratio than iShares S&P Mid-Cap 400 Value ETF. Additionally, the Vanguard fund provided a slightly higher trailing-12-month distribution yield than its iShares counterpart.
Performance & risk comparison
| Metric | VBR | IJJ |
|---|---|---|
| Max drawdown (5 yr) | (24.20%) | (22.70%) |
| Growth of $1,000 over 5 years (total return) | $1,480 | $1,444 |
What's inside
iShares S&P Mid-Cap 400 Value ETF focuses on mid-cap stocks, with its largest sector allocations in Financial Services at 22.00%, Industrials at 18.00%, and Consumer Cyclical at 14.00%. It holds 303 stocks, and its largest positions include US Foods Holding (NYSE:USFD) at 1.23%, Reliance Steel & Aluminum (NYSE:RS) at 1.10%, and Alcoa (NYSE:AA) at 1.02%. The fund was launched in 2000 and has a trailing-12-month dividend of $2.34 per share.
Vanguard Small-Cap Value ETF targets the small-cap segment with a broader portfolio of 841 holdings. Its sector tilts include Financial Services at 18.00%, Industrials at 17.00%, and Consumer Cyclical at 13.00%. Its top positions include NRG Energy (NYSE:NRG) at 0.74%, Atmos Energy (NYSE:ATO) at 0.73%, and Tapestry (NYSE:TPR) at 0.68%. Launched in 2004, the fund has a trailing-12-month dividend of $4.14 per share.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
Value investing -- buying stocks that appear cheap relative to their earnings or assets -- has a long history of rewarding patient investors. VBR and IJJ both apply that philosophy to smaller companies, but they operate in different market cap tiers with meaningfully different cost profiles.
VBR tracks the CRSP US Small Cap Value Index, holding roughly 850 smaller U.S. companies trading at discounted valuations across industrials, financials, and consumer sectors. IJJ focuses one tier up, targeting mid-sized companies through the S&P Mid-Cap 400 Value Index -- businesses that have typically grown past the most volatile early stages but still trade below their intrinsic value.
The cost difference is hard to ignore. VBR charges less than half of what IJJ does, a gap that compounds meaningfully for long-term holders. VBR also holds significantly more assets, reflecting its broader investor base and institutional track record. For investors seeking maximum small-cap value exposure at minimal cost, VBR is the stronger fit. IJJ is a good choice for those who want value characteristics with the added stability that mid-cap companies tend to offer.
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Sara Appino has no position in any of the stocks mentioned. The Motley Fool recommends Tapestry. The Motley Fool has a disclosure policy.
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