Vanguard or iShares: Which Offers the Better Small-Cap ETF?
Key Points
Vanguard Small-Cap ETF charges half the expense ratio of iShares Core S&P Small-Cap ETF, but both are extremely low-cost.
IJR is slightly more concentrated and tilts more toward financials, while VB emphasizes industrial and technology stocks.
Performance and risk metrics are nearly identical, though VB edges ahead in five-year growth.
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The Vanguard Small-Cap ETF (NYSEMKT:VB) and iShares Core S&P Small-Cap ETF (NYSEMKT:IJR) both offer broad, low-cost small-cap U.S. stock exposure, but differ in sector tilts, number of holdings, and minor differences in cost and recent returns.
Both VB and IJR are designed for investors seeking diversified access to U.S. small-cap equities, tracking slightly different indexes and offering ultra-low fees. This comparison unpacks how these subtle distinctions play out in cost, composition, performance, and risk.
Snapshot (cost & size)
| Metric | VB | IJR |
|---|---|---|
| Issuer | Vanguard | IShares |
| Expense ratio | 0.03% | 0.06% |
| 1-yr return (as of 2026-03-11) | 20.1% | 18.9% |
| Dividend yield | 1.3% | 1.4% |
| Beta | 1.07 | 1.04 |
| AUM | $169.1 billion | $92.2 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.
VB is slightly more affordable with a 0.03% expense ratio, compared to IJR’s 0.06%. Yield is nearly a wash, but IJR edges ahead by 0.1 percentage points, offering a marginally higher payout.
Performance & risk comparison
| Metric | VB | IJR |
|---|---|---|
| Max drawdown (5 y) | -28.16% | -28.02% |
| Growth of $1,000 over 5 years | $1,204 | $1,083 |
Performance and risk are tightly aligned: both funds experienced similar maximum drawdowns over the past five years, but VB delivered stronger five-year growth of $1,204 on a $1,000 investment, versus $1,083 for IJR. This difference likely reflects index construction nuances and sector tilts, rather than meaningful divergence in strategy or risk profile.
What's inside
IJR tracks a basket of 647 U.S. small-cap stocks, with its top holdings currently including Solstice Advanced Materials Inc (NASDAQ:SOLS), Interdigital Inc (NASDAQ:IDCC), and CareTrust REIT (NYSE:CTRE). The fund’s sector allocations tilt toward financial services (17%), industrials (16%), and consumer cyclicals (15%). With a fund age of 25.8 years and no notable quirks, IJR offers straightforward exposure to its segment.
VB, in contrast, holds a broader collection of 1,317 stocks and tilts more toward industrials (20%), technology (17%), and financial services (13%). Its largest positions are Sandisk Corp (NASDAQ:SNDK), Comfort Systems USA Inc (NYSE:FIX), and Lumentum (NASDAQ:LITE). Both funds avoid leverage, currency hedging, or other structural quirks.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
These two ETFs cover slightly different ground within the small-cap universe. The Vanguard ETF tracks the CRSP US Small Cap Index, which includes around 1,317 small-cap stocks. It basically covers the same ground as the Russell 2000 up to a point, as it leaves off the smallest 700 or so microcap stocks.
The iShares ETF tracks a more selective portion of the small-cap universe, specifically, the S&P SmallCap 600. This index focuses only on small-cap stocks that are profitable, and have met certain screens to ensure that they trade frequently enough.
The Vanguard ETF has consistently been the better performer of the two, with a one-year return of 17%, a three-year average annualized return of 13.1%, and a 10-year average return of 9.4%. The iShares ETF has returned 17%, 9.3%, and 8.6% over the same one-, three-, and 10-year periods. The Vanguard ETF also has a minuscule expense ratio of 0.03%, compared to 0.06% for the iShares ETF.
Based on its greater diversification, its track record, and its lower expense ratio, the Vanguard Small-Cap ETF looks like the better option.
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Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Comfort Systems USA, Lumentum, Rocket Lab, Vanguard Index Funds - Vanguard Small-Cap ETF, and iShares Core S&P Small-Cap ETF. The Motley Fool has a disclosure policy.
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