Vanguard Small-Cap ETF

VB

Market cap $66.9B

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.

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If you're interested in broad exposure to the Small Cap Blend segment of the US equity market, look no further than the Vanguard Small-Cap ETF (VB), a passively managed exchange traded fund launched on 01/26/2004.

I recommend buying the Vanguard Small-Cap ETF (VB) for diversified, cost-effective exposure to U.S. small caps with strong upside potential. Key catalysts include anticipated tax cuts, projected interest rate reductions in 2025, and easing trade tensions, all of which should benefit small caps. Current valuation at 13.5x EV/EBITDA offers a 14.8% upside versus historical averages, supporting a favorable risk-return profile.

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Zachary Evens: Small stocks have underperformed their larger counterparts for a long time, prompting some people, including myself, to ask: why bother with small-cap ETFs? While there's an argument to be made on both sides, small-cap valuations are undeniably low, offering investors some upside if they converge with their fair value. Small-cap stocks are risky, though, and investors should control risk if they aim to capture that upside.