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

The Vanguard Small-Cap Growth ETF (VBK) was launched on January 26, 2004, and is a passively managed exchange traded fund designed to offer broad exposure to the Small Cap Growth segment of the US equity market.

The fund is sponsored by Vanguard. It has amassed assets over $19.88 billion, making it the largest ETF attempting to match the Small Cap Growth segment of the US equity market.

Why Small Cap Growth

There's a lot of potential to investing in small cap companies, but with market capitalization below $2 billion, that high potential comes with even higher risk.

While growth stocks do boast higher than average sales and earnings growth rates, and they are expected to grow faster than the wider market, investors should note these kinds of stocks have higher valuations. 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

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 0.52%.

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 Industrials sector -- about 22.2% of the portfolio. Information Technology and Healthcare round out the top three.

Looking at individual holdings, Slcmt1142 accounts for about 2% 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 gained about 3.74% so far this year and was up about 16.6% in the last one year (as of 08/14/2025). 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 22.39% for the trailing three-year period, making it a medium risk choice in the space. With about 578 holdings, it effectively diversifies company-specific risk.

Story Continues## Alternatives

Vanguard Small-Cap Growth ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, VBK is a sufficient option for those seeking exposure to the Style Box - Small Cap Growth area of the market. Investors might also want to consider some other ETF options in the space.

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 $6.30 billion in assets, iShares Russell 2000 Growth ETF has $12.28 billion. IJT has an expense ratio of 0.18% and IWO charges 0.24%.

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 Small-Cap Growth ETF (VBK): ETF Research Reports

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

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