If you're interested in broad exposure to the Small Cap Growth segment of the US equity market, look no further than the Vanguard Small-Cap Growth ETF (VBK), a passively managed exchange traded fund launched on January 26, 2004.
The fund is sponsored by Vanguard. It has amassed assets over $21.29 billion, making it the largest ETF attempting to match the Small Cap Growth segment of the US equity market.
Why Small Cap Growth
Sitting at a market capitalization below $2 billion, small cap companies tend to be high-potential stocks compared to its large and mid cap counterparts, but come with higher risk.
Qualities of growth stocks include faster growth rates compared to the broader market, as well as higher valuations and higher than average sales and earnings growth rates. Further, growth stocks have a higher level of volatility associated with them. Even though growth stocks are more likely to outperform their value counterparts in strong bull markets, value stocks have a record of delivering better returns in almost all markets than growth stocks.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.05%, making it the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.51%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Industrials sector -- about 25.2% of the portfolio. Information Technology and Healthcare round out the top three.
Looking at individual holdings, Slcmt1142 accounts for about 1.38% of total assets, followed by Rocket Lab Corp (RKLB) and Ciena Corp (CIEN).
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 about 5.91% so far this year and it's up approximately 15.96% in the last one year (as of 02/25/2026). In the past 52-week period, it has traded between $219.76 and $327.38.
The ETF has a beta of 1.16 and standard deviation of 20.41% for the trailing three-year period, making it a medium risk choice in the space. With about 561 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 $6.81 billion in assets, iShares Russell 2000 Growth ETF has $13.34 billion. IJT has an expense ratio of 0.18% and IWO charges 0.24%.
Bottom-Line
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds 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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