Launched on January 26, 2004, the Vanguard Morningstar Small-Cap Growth ETF (VBK) is a passively managed exchange traded fund designed to provide a broad exposure to the Small Cap Growth segment of the US equity market.
The fund is sponsored by Vanguard. It has amassed assets over $23.55 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. Also, growth stocks are a type of equity that carries more risk compared to others. 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
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 0.44%.
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 25.5% of the portfolio. Industrials and Healthcare round out the top three.
Looking at individual holdings, Slcmt1142 accounts for about 1.71% of total assets, followed by Revolution Medicines Inc (RVMD) 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 return is roughly 14.31% so far this year and is up roughly 18.12% in the last one year (as of 09/02/2026). In the past 52-week period, it has traded between $281.53 and $366.24.
The ETF has a beta of 1.17 and standard deviation of 21.01% for the trailing three-year period, making it a medium risk choice in the space. With about 552 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard Morningstar 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 a great 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 $8.11 billion in assets, iShares Russell 2000 Growth ETF has $14.64 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 Morningstar Small-Cap Growth ETF (VBK): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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