Head-to-Head: Tracing the Line Between Low Costs and True Small-Cap Growth
Key Points
Vanguard Morningstar Small-Cap Growth ETF features a significantly lower expense ratio and larger assets under management (AUM) than State Street SPDR S&P 600 Small Cap Growth ETF.
State Street SPDR S&P 600 Small Cap Growth ETF achieved higher total returns over the past year and demonstrated a more resilient maximum drawdown over five years.
The two funds diverge on sector concentration, with the Vanguard fund focusing on technology and the SPDR fund leaning into industrials.
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Vanguard Morningstar Small-Cap Growth ETF (NYSEMKT:VBK) offers an ultra-low-cost structure and high liquidity for small-cap exposure, while State Street SPDR S&P 600 Small Cap Growth ETF (NYSEMKT:SLYG) tracks a different index with a profitability mandate.
Small-cap growth stocks often provide the engine for long-term portfolio appreciation, but the methodology used to select them matters. While both funds target smaller companies with expansion potential, they vary significantly in their sector tilts, costs, and historical volatility profiles.
Snapshot (cost & size)
| Metric | VBK | SLYG |
|---|---|---|
| Issuer | Vanguard | SPDR |
| Share price | $327.49 (as of 2026-10-23) | $107.59 (as of 2026-10-23) |
| Expense ratio | 0.05% | 0.15% |
| 1-yr return (as of Oct. 23, 2026) | 8.0% | 13.9% |
| Dividend yield | 0.4% | 0.7% |
| Beta | 1.19 | 1.06 |
| AUM | $43.0 billion | $4.6 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-year return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
The Vanguard fund is more affordable with an expense ratio of 0.05%, compared to 0.15% for the SPDR fund. For income-seeking investors, the SPDR fund offers a slightly higher payout with a yield gap of 0.30 percentage points.
Performance & risk comparison
| Metric | VBK | SLYG |
|---|---|---|
| Max drawdown (5 yr) | (38.4%) | (29.2%) |
| Growth of $1,000 over 5 years (total return) | $1,149 | $1,264 |
What's inside
State Street SPDR S&P 600 Small Cap Growth ETF focuses on industrials (21%), financial services (16%), and healthcare (16%). It holds 349 stocks, and its largest positions include Protagonist Therapeutics Inc (NASDAQ:PTGX) at 1.10%, Ryman Hospitality Properties (NYSE:RHP) at 1.09%, and Viasat Inc (NASDAQ:VSAT) at 1.04%. It was launched in 2000. State Street SPDR S&P 600 Small Cap Growth ETF has paid $0.78 per share over the trailing 12 months, which, on its recent ~$107.59 share price, works out to a 0.7% yield.
Vanguard Morningstar Small-Cap Growth ETF is more concentrated in technology (28%), healthcare (20%), and industrials (19%). It has a broader portfolio of 579 holdings, and its top holdings include Natera Inc (NASDAQ:NTRA) at 1.62%, Twilio Inc (NYSE:TWLO) at 1.28%, and Revolution Medicines Inc (NASDAQ:RVMD) at 1.19%. It was launched in 2004. Vanguard Morningstar Small-Cap Growth ETF has paid $1.40 per share over the trailing 12 months, which, on its recent ~$327.49 share price, works out to a 0.4% yield.
For more guidance on ETF investing, check out the full guide at this link.
Which looks like the better buy
When comparing the Vanguard Morningstar Small-Cap Growth ETF (VBK) and the State Street SPDR S&P 600 Small Cap Growth ETF (SLYG), investors should consider several key factors. Let's see what they tell us about each fund.
First, we should examine each fund's strategy. SLYG is a fund focused on small-cap growth stocks with positive earnings. It holds about 350 stocks. VBK, on the other hand, holds nearly 600 stocks. What's more, it doesn't simply hold small-cap stocks; it has significant overlap with mid-cap stocks due to its higher market-cap threshold. For example, the median market cap of a stock held by VBK is $11.7 billion, whereas it is $4.0 billion for SLYG.
Two other important factors are historical performance and income potential. Turning to performance first, SLYG has generated a total return of 30% over the last five years, equating to a compound annual growth rate (CAGR) of 5.4%. VBK, on the other hand, has delivered a total return of 18%, with a 3.4% CAGR. As for income, SLYG has a modest dividend yield of 0.7%, while VBK's is 0.4%.
One final factor to weigh is cost. Here, VBK has a slight edge. VBK's annual expense ratio is 0.05%, making it very affordable. SLYG's 0.15% expense ratio is good, but not as low as VBK's.
In summary, VBK and SLYG are both growth ETFs, however, they differ in several key respects. SLYG is more focused on small-cap stocks, while VBK strays somewhat into the mid-cap category. SLYG has also delivered better returns over the last five years and has a slightly higher dividend yield. VBK can claim a cost advantage, however. For many investors, SLYG will be favored in the head-to-head matchup. Yet some extremely cost-conscious investors may choose VBK for its lower expense ratio.
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Jake Lerch has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Natera, Protagonist Therapeutics, Twilio, and Vanguard Morningstar Small-Cap Growth ETF. The Motley Fool recommends Ryman Hospitality Properties. The Motley Fool has a disclosure policy.
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