Vanguard vs. Schwab: Which Small-Cap ETF Belongs in Your Portfolio?
Key Points
Vanguard Small-Cap ETF offers a lower expense ratio and higher assets under management than Schwab U.S. Small-Cap ETF.
Schwab U.S. Small-Cap ETF offers broader diversification across the small-cap segment.
Vanguard Small-Cap ETF showed a lower maximum drawdown and higher growth on a $1,000 investment over the last five years.
- 10 stocks we like better than Schwab Strategic Trust - Schwab U.s. Small-Cap ETF ›
Vanguard Small-Cap ETF (NYSEMKT:VB) provides a cost-efficient entry to small-cap stocks with high liquidity, while Schwab U.S. Small-Cap ETF (NYSEMKT:SCHA) offers broader diversification and has delivered higher recent total returns.
Small-cap stocks can offer significant growth potential for investors willing to endure higher volatility than the broader market typically exhibits. The Vanguard fund and the Schwab ETF represent two of the most popular low-cost options for gaining this exposure. While both target smaller companies, they utilize different underlying indices that result in varying risk profiles, sector concentrations, and total stock counts.
Snapshot (cost & size)
| Metric | VB | SCHA |
|---|---|---|
| Issuer | Vanguard | Schwab |
| Expense ratio | 0.03% | 0.04% |
| 1-yr return (as of Apr. 27, 2026) | 33.90% | 44.10% |
| Dividend yield | 1.20% | 1.10% |
| Beta | 1.06 | 1.10 |
| Assets under management (AUM) | $164.6 billion | $22.0 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.
Cost remains a primary consideration for long-term index investors, and the Vanguard fund is slightly more affordable with its 0.03% expense ratio compared to 0.04% for the Schwab ETF. Both funds offer modest income components, though the Vanguard fund provided a slightly higher payout over the last year with its 1.20% dividend yield compared to 1.10% for the Schwab fund.
Performance & risk comparison
| Metric | VB | SCHA |
|---|---|---|
| Max drawdown (5 yr) | (28.20%) | (30.80%) |
| Growth of $1,000 over 5 years (total return) | $1,353 | $1,334 |
What's inside
Schwab U.S. Small-Cap ETF (NYSEMKT:SCHA) seeks to mirror the total return of the Dow Jones U.S. Small-Cap Total Stock Market Index. Its portfolio weights are currently led by technology (18.00%), financial services (16.00%), and industrials (16.00%). Its largest individual positions include Sandisk (NASDAQ:SNDK) at 3.23%, Lumentum (NASDAQ:LITE) at 1.39%, and Revolution Medicines (NASDAQ:RVMD) at 0.59%. This fund, which holds 1,728 stocks and was launched in 2009, has a trailing-12-month dividend of $0.34 per share.
Vanguard Small-Cap ETF (NYSEMKT:VB) tracks the CRSP US Small Cap Index through a passively managed, full-replication approach that focuses on a diversified group of small companies. The portfolio leans into industrials (20.00%), technology (16.00%), and financial services (13.00%). Its largest individual positions include EMCOR (NYSE:EME) at 0.45%, NRG Energy (NYSE:NRG) at 0.42%, and Atmos Energy (NYSE:ATO) at 0.42%. The Vanguard fund launched in 2004, manages a total of 1,357 holdings, and paid $3.50 per share over the trailing 12 months.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
Small-cap stocks occupy a specific and important role in a long-term portfolio. They offer exposure to companies too small for the S&P 500 -- businesses with more room to grow, more sensitivity to the domestic economy, and more volatility than their large-cap counterparts. Over long time horizons, small caps have historically rewarded patient investors, though the ride is rarely smooth.
VB and SCHA are two of the most cost-efficient ways to access that universe, and they are remarkably similar. Both charge essentially nothing in annual fees. It’s a difference so small it amounts to pennies per year on a typical investment. Both hold well over 1,000 small-cap stocks with no profitability screen, no quality filter, and no single holding carrying meaningful weight. Both track the broad small-cap market without any tilt toward growth or value.
The most meaningful difference between them is scale. VB commands significantly more assets, giving it deeper liquidity and a longer track record. For most long-term investors, the practical choice comes down to which brokerage they use. Vanguard investors will naturally reach for VB, Schwab investors for SCHA.
Should you buy stock in Schwab Strategic Trust - Schwab U.s. Small-Cap ETF right now?
Before you buy stock in Schwab Strategic Trust - Schwab U.s. Small-Cap ETF, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Schwab Strategic Trust - Schwab U.s. Small-Cap ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $497,606!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,306,846!*
Now, it’s worth noting Stock Advisor’s total average return is 985% — a market-crushing outperformance compared to 200% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of April 29, 2026.
Sara Appino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends EMCOR Group and Lumentum. The Motley Fool has a disclosure policy.
Recommended Articles
