Yahoo Finance Should Vanguard Small-Cap ETF (VB) Be on Your Investing Radar?
The Vanguard Small-Cap ETF (VB) was launched on 01/26/2004, and is a passively managed exchange traded fund designed to offer broad exposure to the Small Cap Blend segment of the US equity market.
The fund is sponsored by Vanguard. It has amassed assets over $54.32 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
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.
Typically holding a combination of both growth and value stocks, blend ETFs also demonstrate qualities seen in value and growth investments.
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 0.05%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.14%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Industrials sector--about 21.90% of the portfolio. Financials and Consumer Discretionary round out the top three.
Looking at individual holdings, Slcmt1142 accounts for about 1.19% of total assets, followed by Super Micro Computer Inc (SMCI) and Builders Firstsource Inc (BLDR).
Performance and Risk
VB seeks to match the performance of the CRSP US Small Cap Index before fees and expenses. The CRSP US Small Cap Index includes U.S. companies that fall between the bottom 2%-15% of the investable market capitalization. There is no lower limit in market capitalization. The index includes securities traded on NYSE, NYSE Market, NASDAQ or ARCA.
The ETF return is roughly 2.66% so far this year and is up about 13.26% in the last one year (as of 06/28/2024). In the past 52-week period, it has traded between $175.26 and $228.59.
The ETF has a beta of 1.14 and standard deviation of 21.14% for the trailing three-year period, making it a medium risk choice in the space. With about 1426 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard Small-Cap 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, VB is an excellent 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 $59.69 billion in assets, iShares Core S&P Small-Cap ETF has $76.48 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.
Bottom-Line
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are 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 ETF (VB): ETF Research Reports
Builders FirstSource, Inc. (BLDR) : Free Stock Analysis Report
Super Micro Computer, Inc. (SMCI) : Free Stock Analysis Report
iShares Russell 2000 ETF (IWM): ETF Research Reports
iShares Core S&P Small-Cap ETF (IJR): ETF Research Reports
