ISCG vs. VBK: Which ETF Offers Lower Fees, More Liquidity, and Greater Returns?
Key Points
ISCG holds more stocks than VBK and has a much smaller asset base
Both ETFs delivered strong 1-year returns and similar max drawdowns
ISCG and VBK are closely matched on cost and yield, with only a minor difference in expense and payout rates
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Vanguard Small-Cap Growth ETF (NYSEMKT:VBK) and iShares Morningstar Small-Cap Growth ETF (NYSEMKT:ISCG) both offer diversified exposure to U.S. small-cap growth stocks, but differ in portfolio breadth, assets under management (AUM), and trading liquidity.
Both funds target the small-cap growth segment, with VBK tracking the CRSP U.S. Small Cap Growth Index and ISCG following a Morningstar methodology. This comparison looks at their respective costs, performance, risk, underlying holdings, and practical considerations for investors seeking to tap into smaller growth companies.
Snapshot (cost & size)
| Metric | VBK | ISCG |
|---|---|---|
| Issuer | Vanguard | IShares |
| Expense ratio | 0.05% | 0.06% |
| 1-yr return (as of 2026-03-11) | 23.0% | 24.7% |
| Dividend yield | 0.5% | 0.6% |
| Beta | 1.17 | 1.13 |
| AUM | $40.0 billion | $881.5 million |
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.
ISCG charges a slightly higher expense ratio than VBK, but the difference is just 0.01 percentage points, while ISCG also offers a marginally higher dividend yield.
Performance & risk comparison
| Metric | VBK | ISCG |
|---|---|---|
| Max drawdown (5 y) | -38.39% | -37.80% |
| Growth of $1,000 over 5 years | $1,097 | $1,072 |
What's inside
ISCG holds 963 stocks, making it one of the broader small-cap growth ETFs, and has been running for over 21 years. Its sector mix leans toward industrials (25%), technology (21%), and healthcare (16%). The top holdings are Lumentum Holdings Inc (NASDAQ:LITE), Ati Inc (NYSE:ATI), and Rbc Bearings Inc (NYSE:RBC), with no single stock accounting for more than 1.7% of assets. The fund does not employ leverage, currency hedges, or ESG screens.
In contrast, VBK holds 579 stocks, with a higher allocation to technology (26%) and similar weightings to industrials (23%) and healthcare (17%). Its top positions are Rocket Lab Corp (NASDAQ:RKLB), Comfort Systems USA Inc (NYSE:FIX), and Sandisk Corp (NASDAQ:SNDK), each around 1.2%-1.3% of assets. VBK also avoids leverage or other structural quirks, tracking the CRSP U.S. Small Cap Growth Index for a straightforward approach.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
Exchange-traded funds (ETFs) are a great way for investors to gain exposure to U.S. small-cap stocks. Both the Vanguard Small-Cap Growth ETF (VBK) and iShares Morningstar Small-Cap Growth ETF (ISCG) offer compelling options for investors. Let’s delve into the pros and cons of each.
First, there’s VBK. In the head-to-head matchup with ISCG, VBK takes the gold on a few fronts. It has slightly lower fees (0.05% vs. 0.06%). It also has much higher AUM ($40.0 billion vs. $0.9 billion). This is important because AUM serves as an indicator of liquidity — that is, how easily an investor can buy or sell shares. Lastly, VBK has delivered a better return over the last five years.
As for ISCG, it has advantages, too. ISCG has delivered a better one-year return (24.7% vs. 23.0%). It also boasts a slightly higher dividend yield (0.6% vs. 0.5%). Finally, it has a higher concentration of industrial stocks than VBK, which may appeal to investors seeking an alternative to the tech-heavy tilt of many large or mega-cap ETFs.
In summary, VBK and ISCG are both appealing options for small-cap investors. VBK wins the matchup on fees, liquidity, and long-term performance. Meanwhile, ISCG takes the prize on long-term performance, dividend yield, and sector exposure.
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Jake Lerch has positions in Rocket Lab and has the following options: long December 2026 $30 puts on Rocket Lab. The Motley Fool has positions in and recommends Comfort Systems USA, Lumentum, RBC Bearings, Rocket Lab, and Vanguard Index Funds - Vanguard Small-Cap Growth ETF. The Motley Fool has a disclosure policy.
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