Vanguard Small-Cap ETF

VB

Market cap $69.3B

The S&P 500 includes large-cap stocks and excludes mid-cap and small-cap stocks. Vanguard's mid- and small-cap ETFs have lower valuations than their S&P 500 counterpart.

Vanguard Small Cap ETF (VB) is rated a buy, supported by attractive valuation, solid fundamentals, and a constructive long-term technical setup. VB has outperformed IJR and IWM but lagged SPY and VSS, highlighting mixed relative performance among small-cap benchmarks. Despite high volatility and macro risks, VB's 16.2x P/E, 1.5x PEG, and balanced value-growth mix offer compelling diversification.

Looking for broad exposure to the Small Cap Blend segment of the US equity market? You should consider the Vanguard Small-Cap ETF (VB), a passively managed exchange traded fund launched on January 26, 2004.

And what to look for when shopping for one.

Whether you've been investing for years or are simply starting out, buying exchange-traded funds (ETFs) can be a smart way to diversify your portfolio and invest in the best stocks in the market.

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

No investor can go wrong by investing in the broader S&P 500 index each month, as over the long term, their capital will grow in line with the average economic growth of the United States. However, safety and low volatility come with a tradeoff, which is the opportunity for higher growth that is lost through this broad diversification.

As the Federal Reserve's rate cuts become more likely to begin in September, investors may shift their focus back to U.S. small-cap ETFs. Many of these funds have been out of favor in 2025, as large-cap counterparts have captured significant investor attention.

VB is showing signs of a comeback, driven by likely monetary easing, attractive valuations, and a broadening market beyond mega-cap tech. Small caps benefit from supportive macro conditions: moderate growth, easing inflation, deregulatory policies, and tax cuts, improving their outlook, versus large caps. VB offers low-cost, diversified exposure to small caps, and active alternatives, like TMSL, have not delivered superior risk-adjusted returns after fees.

I rate the Vanguard Small-Cap ETF a buy, expecting small caps to outperform due to low valuations, strong earnings, and upcoming rate cuts. Small caps are at the end of a long underperformance cycle, with historical patterns and current valuations signaling a likely leadership shift. VB offers broad diversification, low fees, and solid performance versus peers, though tech exposure is a concern; industrials and financials are well positioned.