Vanguard Small-Cap Value vs iShares Russell 2000 Value: Which ETF Is the Better Buy Right Now?
Key Points
iShares Russell 2000 Value ETF has delivered a significantly higher 1-year total return than Vanguard Small-Cap Value ETF but comes with a higher expense ratio
Vanguard Small-Cap Value ETF holds a larger number of individual stocks and maintains a slightly higher dividend yield than the iShares fund
While both funds target smaller value-oriented companies, the iShares Russell 2000 Value ETF shows a heavier concentration in financial services
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Vanguard Small-Cap Value ETF (NYSEMKT:VBR) provides a lower-cost, broader approach to small-cap value, while iShares Russell 2000 Value ETF (NYSEMKT:IWN) offers potentially higher volatility and more concentrated sector tilts.
Both funds target the same segment of the market -- small companies that trade at low price-to-book or price-to-earnings ratios. However, they track different indexes, leading to distinct differences in risk, return, and portfolio composition that investors could consider before choosing between them.
Snapshot (cost & size)
| Metric | VBR | IWN |
|---|---|---|
| Issuer | Vanguard | iShares |
| Expense ratio | 0.05% | 0.24% |
| 1-yr return (as of June 23, 2026) | 26.20% | 42.30% |
| Dividend yield | 1.70% | 1.50% |
| Beta | 0.95 | 1.01 |
| AUM | $65.5 billion | $14.3 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 as of June 23’s closing price.
Vanguard Small-Cap Value ETF is the more affordable option with an expense ratio of 0.05%, compared to 0.24% for iShares Russell 2000 Value ETF. The Vanguard fund also provides a slightly higher payout for income-seeking investors.
Performance & risk comparison
| Metric | VBR | IWN |
|---|---|---|
| Max drawdown (5 yr) | (24.20%) | (26.70%) |
| Growth of $1,000 over 5 years (total return) | $1,510.00 | $1,413.00 |
What's inside
The iShares Russell 2000 Value ETF, launched in 2000, focuses on U.S. small-cap value stocks, carrying 1,407 in its portfolio. Its sector weights include Financial Services at 23.9%, Industrials at 12.1%, and Technology at 11.%. Top positions include TTM Technologies Inc (NASDAQ:TTMI) at 1.1%, Echostar Corp Class A (NASDAQ:SATS) at 1.1%, and Hut 8 Mining Corp (NASDAQ:HUT). It has paid $3.19 per share over the trailing 12 months.
The Vanguard Small-Cap Value ETF, launched in 2004, is less diversified with 841 holdings. Its top sectors include Financial Services at 17.5%, Industrials at 17.4%, and Consumer Cyclical at 12.5%. Its largest positions include Flex Ltd (NASDAQ:FLEX) at 1.25%, Jabil Inc (NYSE:JBL) at 0.8%, and Tapestry Inc (NYSE:TPR) at 0.7%. The Vanguard fund has a trailing-12-month dividend of $4.14 per share.
Which ETF is the better buy?
The iShares Russell 2000 Value ETF is having an excellent year, with its more diverse small-cap portfolio benefiting from the recent run in small caps relative to mid- and large-cap sectors.
Both funds are good ways to play the small-cap sector, which should be a part of most diversified portfolios.
But the Vanguard Small-Cap Value ETF gets the nod, given that it outperforms IWO on every other longer time frame. VBR has returned more than 18% the past three years, compared to 13.5% for IWO, according to information from each fund as of March 31. The Vanguard offering also bests the iShares competitor on the 5-year lookback, 8.19% to 5.56%, and the 10-year time, 10.58% to 9.42%.
Some of this outperformance may be due to the concentration of holdings in VBR compared to IWO. That may not be replicable in the future. But Vanguard Small-Cap ETF’s low expense ratio has been a factor in past performance and will continue to be, especially when considering IWO’s much higher expenses. Go with Vanguard.
For more guidance on ETF investing, check out the full guide at this link.
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Brendan Coffey has no position in any of the stocks mentioned. The Motley Fool recommends Flex and Tapestry. The Motley Fool has a disclosure policy.
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