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Vanguard Small-Cap ETF edges out iShares Core SP Small-Cap ETF on one-year and five-year total returns
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VB holds more than twice as many stocks, with a modest tilt toward industrials and technology
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Both funds remain highly diversified and inexpensive, with near-identical yields and risk profiles
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Vanguard Small-Cap ETF (NYSEMKT:VB) and iShares Core SP Small-Cap ETF (NYSEMKT:IJR) offer broad small-cap U.S. equity exposure with similar costs and risk, but VB features a wider portfolio and slightly higher recent returns.
Both VB and IJR are designed for investors seeking low-cost, diversified access to the U.S. small-cap stock market. This comparison looks at how these two popular funds differ in cost, performance, diversification, and sector exposures, helping investors decide which may better fit their small-cap allocation.
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Metric
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IJR
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VB
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Issuer
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IShares
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Vanguard
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Expense ratio
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0.06%
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0.05%
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1-yr return (as of 2026-01-09)
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11.8%
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14.1%
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Dividend yield
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1.4%
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1.3%
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Beta
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1.08
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1.10
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AUM
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$92.5 billion
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$72.7 billion
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Beta measures price volatility relative to the S&P 500; beta is calculated from five-year weekly returns. The 1-yr return represents total return over the trailing 12 months.
VB is marginally more affordable on fees, with an expense ratio of 0.05% compared to IJR’s 0.06%. Yield is nearly identical, with IJR offering a 1.4% payout and VB at 1.3%, so neither stands out on income.
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Metric
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IJR
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VB
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Max drawdown (5 y)
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-28.02%
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-28.16%
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Growth of $1,000 over 5 years
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$1,288
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$1,334
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VB tracks a broad CRSP U.S. small-cap index and currently holds 1,357 stocks, making it one of the most diversified small-cap ETFs on the market. The portfolio tilts toward industrials (19%) and technology (17%), with healthcare at 13%. Its largest positions, such as Insmed Inc (NASDAQ:INSM), Comfort Systems USA Inc (NYSE:FIX), and SoFi Technologies Inc (NASDAQ:SOFI), each account for less than 1% of assets. With 22 years of history and no leverage or ESG filters, VB aims for broad, low-turnover small-cap exposure.
IJR also pursues U.S. small-cap stocks, but with a slightly narrower focus—632 holdings and top weights in Arrowhead Pharmaceuticals Inc (NASDAQ:ARWR), Lkq Corp (NASDAQ:LKQ), and Armstrong World Industries Inc (NYSE:AWI). Sector allocations are similar, though IJR leans more into financial services (18%) and industrials (16%), with technology at 15%. Both funds maintain broad diversification and avoid specialized quirks.
For more guidance on ETF investing, check out the full guide at this link.
How should potential investors view Vanguard Small-Cap ETF (VB) and iShares Core SP Small-Cap ETF (IJR)? Here’s how they stack up.
First, VB holds about twice as many stocks as its rival — 1,357 versus 632. As a result, VB offers investors greater diversification. Yet, despite this greater diversification, VB has experienced roughly the same volatility as IJR. Both funds have seen a max drawdown over the last five years of approximately 28%.
Turning to fees, VB offers a very slim advantage over IJR. VB has an expense ratio of 0.05%, while its rival’s expense ratio is 0.06%. Meanwhile, in terms of dividend yield, both funds sport very similar dividend yields, with IJR having a dividend yield of 1.4%, and VB having a 1.3% yield.
Lastly, there’s performance. On that front, both funds have underperformed the S&P 500 over the last five years. However, VB has generated a higher total return (43%), while IJR has generated a total return of 38%.
In sum, these two small cap funds are quite similar. Nevertheless, there are some differences that could tip the scales in favor of one over another. VB has a stronger historical track record, along with slightly lower fees. Meanwhile, IJR has a marginally higher dividend yield, which could matter to income-seeking investors.
ETF: Exchange-traded fund that holds a basket of securities and trades like a stock.
Expense ratio: Annual fund operating costs expressed as a percentage of the fund’s average assets.
Dividend yield: Annual dividends paid by a fund divided by its current share price, shown as a percentage.
Total return: Investment performance including price changes plus all dividends and distributions, assuming reinvestment.
Beta: Measure of an investment’s volatility compared with the overall market, often the S&P 500.
AUM: Assets under management; the total market value of all assets a fund manages.
Max drawdown: The largest peak-to-trough decline in value over a specific period, showing worst historical loss.
Small-cap: Companies with relatively low stock market value, typically smaller and more volatile than large-cap firms.
Diversification: Spreading investments across many securities or sectors to reduce the impact of any single holding.
Sector allocation: How a fund’s assets are distributed across different industries, such as technology or healthcare.
Index: A rules-based basket of securities used to track or benchmark a segment of the market.
Leverage (in funds): Use of borrowed money or derivatives to amplify returns, which also increases potential losses.
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Jake Lerch has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Comfort Systems USA, Vanguard Index Funds – Vanguard Small-Cap ETF, and iShares Trust – iShares Core S&P Small-Cap ETF. The Motley Fool recommends LKQ. The Motley Fool has a disclosure policy.
VB vs. IJR: Vanguard Small Cap ETF Delivers Higher Returns With a Lower Dividend Yield was originally published by The Motley Fool
