Small-Cap Value ETFs: SLYV Tops VBR in One Year Growth, VBR Offers Lower Fees

The Vanguard Small-Cap Value ETF (NYSEMKT:VBR) provides ultra-low-cost exposure to a broad basket of small-cap value stocks, while the State Street SPDR S&P 600 Small Cap Value ETF (NYSEMKT:SLYV) offers a more concentrated, index-specific alternative.

Investors seeking to capitalize on small-company valuations often choose between these two funds to capture the value factor. While both target the small-cap segment, their underlying indexes lead to different portfolio densities and sector weights. This comparison helps determine which fund better fits a specific long-term strategy.

Snapshot (cost & size)

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.

The Vanguard fund is the more affordable option, charging an expense ratio of 0.05% compared to the 0.15% charged by the SPDR fund. Both ETFs offer similar yields, providing a consistent payout slightly below 2.00%.

Performance & risk comparison

What's inside

The Vanguard Small-Cap Value ETF (VBR) offers a broad view of the small-cap landscape, with 841 holdings. Its sector allocation leads with financial services at 18.00%, industrials at 17.00%, and consumer cyclical at 13.00%. The largest positions include Jabil (NYSE:JBL) at 0.76%, Flex (NASDAQ:FLEX) at 0.76%, and NRG Energy (NYSE:NRG) at 0.74%. This fund, which launched in 2004, has a trailing-12-month dividend of $4.14 per share. Its passive approach offers wide-reaching exposure to the CRSP U.S. Small Cap Value Index.

In contrast, the State Street SPDR S&P 600 Small Cap Value ETF (SLYV) tracks the S&P SmallCap 600 Value Index with a more concentrated 460 holdings. Its sector tilts are heavier in financial services at 20.00% and consumer cyclical at 16.00%, while industrials account for 12.00%. Its largest positions include Molina Healthcare (NYSE:MOH) at 1.15%, Match Group (NASDAQ:MTCH) at 1.01%, and Eastman Chemical (NYSE:EMN) at 0.99%. Launched in 2000, it has a trailing-12-month dividend of $1.90 per share. This higher concentration may appeal to investors seeking specific index characteristics over total market breadth.

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Which looks like the better buy

The Vanguard Small-Cap Value ETF (VBR) and the State Street SPDR S&P 600 Small Cap Value ETF (SLYV) are both exchange-traded funds (ETFs) focused on the small-cap value segment of the market. Here’s how they stack up with one another.

First, let’s take a closer look at SLYV. This fund holds approximately 460 stocks, with a heavy focus on the financial services and consumer cyclical sectors. In recent years, this fund has underperformed the broader market. Shares of SLYV have generated a total return of about 35% over the last five years, equating to a compound annual growth rate (CAGR) of 6.2%. By contrast, the S&P 500 has generated a total return of approximately 92% over the same period, with a CAGR of 13.9%. SLYV has a decent expense ratio of 0.15% and a dividend yield of 1.81%.

Next, there’s VBR. This fund has nearly twice SLYV’s holdings, with 840 stocks. What’s more, it has a lower financials percentage and a greater share of industrials. Over the last five years, VBR has generated a total return of 50%, with a CAGR of 8.4%. While the fund has underperformed the S&P 500, it has delivered higher returns than SLYV over this period. Moreover, VBR has a lower expense ratio of 0.05%. Its dividend yield of 1.76% is very similar to SLYV.

To sum up, VBR tops SLYV in a few important ways. VBR has a lower expense ratio; it has also delivered better returns over the last five years. However, SLYV has a slightly higher dividend yield, which could appeal to income-focused investors. SLYV has also performed better over the last 12 months, with a 30% return vs. VBR’s 20%.

Jake Lerch has no position in any of the stocks mentioned. The Motley Fool recommends Flex, Match Group, and NRG Energy. The Motley Fool has a disclosure policy.