The Vanguard Small-Cap Growth Index Fund ETF Shares (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 $23.99 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.
Qualities of growth stocks include faster growth rates compared to the broader market, as well as higher valuations and higher than average sales and earnings growth rates. Further, growth stocks have a higher level of volatility associated with them. Compared to value stocks, growth stocks are a safer bet in a strong bull market, but don't perform as strongly in almost all other financial environments.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.05%, making it the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.43%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Industrials sector -- about 25.5% of the portfolio. Information Technology and Healthcare round out the top three.
Looking at individual holdings, Slcmt1142 accounts for about 1.68% of total assets, followed by Technipfmc Plc (FTI) and Ciena Corp (CIEN).
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 added about 18.69% so far this year and is up about 28.85% in the last one year (as of 07/03/2026). In the past 52-week period, it has traded between $277.65 and $365.70.
The ETF has a beta of 1.16 and standard deviation of 20.89% for the trailing three-year period, making it a medium risk choice in the space. With about 559 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard Small-Cap Growth Index Fund ETF Shares 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 $8.05 billion in assets, iShares Russell 2000 Growth ETF has $14.91 billion. IJT has an expense ratio of 0.18% and IWO charges 0.24%.
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 Growth Index Fund ETF Shares (VBK): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).