If you're interested in broad exposure to the Small Cap Blend segment of the US equity market, look no further than the Vanguard Russell 2000 ETF (VTWO), a passively managed exchange traded fund launched on 09/22/2010.
The fund is sponsored by Vanguard. It has amassed assets over $12.15 billion, making it one of the largest ETFs attempting to match the Small Cap Blend segment of the US equity market.
Why Small Cap Blend
Small cap companies have market capitalization below $2 billion. They usually have higher potential than large and mid cap companies with stocks but higher risk.
Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.
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 1.37%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Financials sector--about 18.90% of the portfolio. Industrials and Healthcare round out the top three.
Looking at individual holdings, Slbbh1142 accounts for about 1.68% of total assets, followed by Sprouts Farmers Market Inc (SFM) and Insmed Inc (INSM).
Performance and Risk
VTWO seeks to match the performance of the Russell 2000 Index before fees and expenses. The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe.
The ETF has lost about -5.39% so far this year and is up about 3.07% in the last one year (as of 06/06/2025). In the past 52-week period, it has traded between $70.56 and $98.06.
The ETF has a beta of 1.10 and standard deviation of 22.74% for the trailing three-year period, making it a medium risk choice in the space. With about 1949 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard Russell 2000 ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, VTWO is an outstanding option for investors seeking exposure to the Style Box - Small Cap Blend segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Russell 2000 ETF (IWM) and the iShares Core S&P Small-Cap ETF (IJR) track a similar index. While iShares Russell 2000 ETF has $61.95 billion in assets, iShares Core S&P Small-Cap ETF has $77.47 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.
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 Russell 2000 ETF (VTWO): ETF Research Reports Insmed, Inc. (INSM): Free Stock Analysis Report iShares Russell 2000 ETF (IWM): ETF Research Reports Sprouts Farmers Market, Inc. (SFM): Free Stock Analysis Report iShares Core S&P Small-Cap ETF (IJR): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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