Should Vanguard Small-Cap Growth ETF (VBK) Be on Your Investing Radar?

Designed to provide broad exposure to the Small Cap Growth segment of the US equity market, the Vanguard Small-Cap Growth ETF (VBK) is a passively managed exchange traded fund launched on 01/26/2004.

The fund is sponsored by Vanguard. It has amassed assets over $18.54 billion, making it the largest ETFs attempting to match the Small Cap Growth segment of the US equity market.

Why Small Cap Growth

With more potential comes more risk, and small cap companies, with market capitalization below $2 billion, epitomizes this way of thinking.

Growth stocks have higher than average sales and earnings growth rates. While these are expected to grow faster than the broader market, they also have higher valuations. Further, growth stocks have a higher level of volatility associated with them. They are likely to outperform value stocks in strong bull markets but over the longer-term, value stocks have delivered better returns than growth stocks in almost all markets.

Costs

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

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 0.55%.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Information Technology sector--about 21.40% of the portfolio. Industrials and Healthcare round out the top three.

Looking at individual holdings, Slcmt1142 accounts for about 1.25% of total assets, followed by Liberty Media Corp-Liberty Formula One (FWONK) and Natera Inc (NTRA).

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 lost about -2.70% so far this year and was up about 10.04% in the last one year (as of 06/12/2025). In the past 52-week period, it has traded between $219.76 and $304.19.

The ETF has a beta of 1.13 and standard deviation of 23.35% for the trailing three-year period, making it a medium risk choice in the space. With about 581 holdings, it effectively diversifies company-specific risk.

Story Continues## 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 an outstanding 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 $6.07 billion in assets, iShares Russell 2000 Growth ETF has $11.48 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 Reports

iShares Russell 2000 Growth ETF (IWO): ETF Research Reports

iShares S&P Small-Cap 600 Growth ETF (IJT): ETF Research Reports

Liberty Media Corporation - Liberty Formula One Series C (FWONK) : Free Stock Analysis Report

Natera, Inc. (NTRA) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research

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