Designed to provide broad exposure to the Small Cap Growth segment of the US equity market, the Vanguard S&P Small-Cap 600 Growth ETF (VIOG) is a passively managed exchange traded fund launched on 09/09/2010.
The fund is sponsored by Vanguard. It has amassed assets over $784.74 million, making it one of the average sized ETFs attempting to match the Small Cap Growth segment of the US equity market.
Why Small Cap Growth
With more potential comes more risk, and small cap companies, with market capitalization below $2 billion, epitomizes this way of thinking.
While growth stocks do boast higher than average sales and earnings growth rates, and they are expected to grow faster than the wider market, investors should note these kinds of stocks have higher valuations. Also, growth stocks are a type of equity that carries more risk compared to others. When you consider growth versus value, growth stocks are usually the clear winner in strong bull markets but tend to fall flat in nearly all other environments.
Costs
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.10%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.30%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Industrials sector--about 20% of the portfolio. Healthcare and Financials round out the top three.
Looking at individual holdings, Ati Inc (ATI) accounts for about 1.15% of total assets, followed by Alaska Air Group Inc (ALK) and Spx Technologies Inc (SPXC).
The top 10 holdings account for about 6.1% of total assets under management.
Performance and Risk
VIOG seeks to match the performance of the S&P Small-Cap 600 Growth Index before fees and expenses. The S&P Small-Cap 600 Growth Index represents the growth companies of the S&P Small-Cap 600 Index.
The ETF has lost about -12.50% so far this year and is down about -7.06% in the last one year (as of 04/04/2025). In the past 52-week period, it has traded between $101.45 and $129.74.
The ETF has a beta of 1.07 and standard deviation of 21.88% for the trailing three-year period, making it a medium risk choice in the space. With about 344 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard S&P Small-Cap 600 Growth ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, VIOG is a reasonable option for those seeking exposure to the Style Box - Small Cap Growth area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 2000 Growth ETF (IWO) and the Vanguard Small-Cap Growth ETF (VBK) track a similar index. While iShares Russell 2000 Growth ETF has $10.29 billion in assets, Vanguard Small-Cap Growth ETF has $16.81 billion. IWO has an expense ratio of 0.24% and VBK charges 0.07%.
Bottom-Line
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Vanguard S&P Small-Cap 600 Growth ETF (VIOG): ETF Research Reports ATI Inc. (ATI): Free Stock Analysis Report Alaska Air Group, Inc. (ALK): Free Stock Analysis Report iShares Russell 2000 Growth ETF (IWO): ETF Research Reports SPX Technologies, Inc. (SPXC): Free Stock Analysis Report Vanguard Small-Cap Growth ETF (VBK): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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