The Vanguard Small-Cap Growth ETF (VBK) was launched on January 26, 2004, and is a passively managed exchange traded fund designed to offer broad exposure to the Small Cap Growth segment of the US equity market.
The fund is sponsored by Vanguard. It has amassed assets over $21.34 billion, making it the largest ETF attempting to match the Small Cap Growth segment of the US equity market.
Why Small Cap Growth
There's a lot of potential to investing in small cap companies, but with market capitalization below $2 billion, that high potential comes with even higher risk.
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. Further, growth stocks have a higher level of volatility associated with them. Compared to value stocks, growth stocks are a safer bet in a strong bull market, but don't perform as strongly in almost all other financial environments.
Costs
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.07%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.66%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Information Technology sector -- about 23.4% of the portfolio. Industrials and Healthcare round out the top three.
Looking at individual holdings, Slcmt1142 accounts for about 1.6% of total assets, followed by Insmed Inc (INSM) and Comfort Systems Usa Inc (FIX).
Performance and Risk
VBK seeks to match the performance of the CRSP U.S. Small Cap Growth Index before fees and expenses. The CRSP U.S. Small Cap Growth Index measures the investment return of small-capitalization growth stocks.
The ETF has added roughly 11.71% so far this year and was up about 10.38% in the last one year (as of 12/23/2025). In the past 52-week period, it has traded between $219.76 and $312.79.
The ETF has a beta of 1.16 and standard deviation of 20.63% for the trailing three-year period, making it a medium risk choice in the space. With about 585 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard Small-Cap Growth ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, VBK is a great option for investors seeking exposure to the Style Box - Small Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares S&P Small-Cap 600 Growth ETF (IJT) and the iShares Russell 2000 Growth ETF (IWO) track a similar index. While iShares S&P Small-Cap 600 Growth ETF has $6.49 billion in assets, iShares Russell 2000 Growth ETF has $13.70 billion. IJT has an expense ratio of 0.18% and IWO charges 0.24%.
Bottom-Line
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
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 Small-Cap Growth ETF (VBK): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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