Vanguard Small-Cap Value Index provides a market-cap-weighted portfolio of the cheapest companies in the small-cap market. Its broad diversification and razor-thin expense ratio make this one of the best small-cap value funds available. 

The fund tracks the CRSP US Small Cap Value Index, which captures the cheaper side of the small-cap market. Value stocks usually have low price/book and price/earnings ratios. Depressed valuations may be caused by slow earnings growth, poor fundamentals, or dim future prospects. While these may not be the most exciting firms, the low expectations implied by their low valuations should be easier to beat.

Market-cap weighting is an efficient way to weight holdings because it harnesses the market's consensus opinion of each stock’s relative value. Stocks that grow in size take up a larger share of the portfolio, while smaller companies that may be struggling will have less importance. Generous buffers around the fund's size and style constraints improve the breadth of the portfolio and help tame turnover.

The portfolio is well-diversified. None of its 800-plus holdings garner more than 1% of assets, with the top 10 holdings representing only 5% of the portfolio as of Dec. 31, 2023. Sector allocations largely resemble the Morningstar Category average. Financials and industrials stocks lead the way, accounting for around 20% of the portfolio each. Their combined 41% weighting is nearly identical to the category average. By most measures, the portfolio is similarly situated to the category and is an excellent representation of the entire market segment.

Performance has been strong since the fund started tracking its current index in April 2013. The ETF share class has outperformed its average category peer by more than 1.5 percentage points annualized through December 2023. Volatility has also been muted relative to the category, allowing the fund to post an even wider risk-adjusted-return advantage. Market-cap weighting pushes the portfolio up the market-cap ladder, contributing to more consistent category-relative performance.

Analyst Rating

An outstanding small-cap value index fund.

Analyst

Zachary Evens

Builders FirstSource

Booz Allen Hamilton Hld

Reliance Steel & Aluminum

Carlisle Companies

IDEX

First Citizens BancShares

Atmos Energy

EMCOR Group

Jabil

Williams-Sonoma

This fund has a lot to like. The strategy effectively captures the full small-cap value market segment and diversifies away most stock-specific risk with its broad reach. It earns an Above Average Process Pillar rating.

Above Average

Process

The Vanguard equity index group boasts seasoned managers and a dedicated supporting staff well-equipped to provide tight index tracking, earning it an Above Average People rating.

Gerard O'Reilly and William Coleman comanage this strategy. O'Reilly, a principal at Vanguard, has been with the firm since 1992 and has helped manage this fund since 2016. Coleman has been with Vanguard since 2006 and started on the strategy in 2016. Both O’Reilly and Coleman were added to the roster following the departure of longtime manager Michael Buek from the strategy at the same time. Buek managed the fund from 1998 through April 2016. 

The managers are responsible for the fund's trading, providing more portfolio insights than a stand-alone trader. They are supported by a global team of dedicated personnel and sophisticated, scalable technology that reduces the managers' workload and improves tracking precision. Vanguard's independent risk-management team works closely with the managers to monitor trades and review any potential issues. The managers' compensation is tied to performance using a combination of tracking error and excess return metrics, which aligns their interests with investors'.

People

As The Vanguard Group settles on new senior leadership, it retains a High Parent rating.

Vanguard announced current CEO Tim Buckley will step down by the end of the year, marking an end to his 33 years at the firm. Historically, Vanguard has pronounced CEO retirements while simultaneously signaling who (from inside the firm) would take over. In this instance, Vanguard’s board said it will evaluate internal and external candidates in the coming months to find its next, and fifth, leader, though it also promoted CIO Greg Davis to president.

Vanguard flourished in several respects under Buckley’s leadership. Assets under management have grown by two thirds over his six years at the helm, while its asset-weighted average US fund fee ratcheted lower to 0.08% at the end of 2023. Vanguard further refined its advice business through its low-cost Digital Advisor platform and more holistic Vanguard Personal Advisor Services, and it debuted promising investment options.

Vanguard has had its share of challenges under Buckley, too. Growing its business outside the US has proved difficult, and ex US investors account for less than 10% of AUM. Between 2019 and 2023, Vanguard’s efforts to build its China business underwent dramatic shifts, with the firm ultimately abandoning plans to launch low-cost index funds there. It also ended a partnership with Ant Financial to provide advisory services to retail investors. Inside the US, customer service issues have continued to be a problem, and some of Vanguard’s newer offers, such as margin loans, seem a departure from a more-conservative approach to investing.

Vanguard retains an investor-friendly culture at its core that’s burnished by a commitment to low costs and supported by its unique mutual ownership structure and direct-to-investor playbook.

High

Parent

Vanguard Small Cap Value ETF

VBR tracks the CRSP US Small Cap Value Index. The index selects from a list of stocks in the 85-99% range of market cap, based on five value factors.

Vanguard Real Estate ETF

Real estate stocks are highly sensitive to interest rate fluctuations and could outperform in the next rate-cutting cycle. Small-cap stocks and value stocks have both underperformed, but falling interest rates could change that.

2 Top ETFs That Could Help You Beat the Market When Interest Rates Start to Fall

There are several good Vanguard ETFs to buy, but one stands above the rest right now. This ETF owns an asset class that has outperformed others historically and could have a key catalyst on the way.

Here's My Favorite Vanguard ETF to Buy Right Now -- and It Isn't Even Close

The Vanguard Small-Cap Value ETF tracks an index of about 855 small companies. There are major disconnects between small-cap and large-cap stocks, as well as between growth and value.

This ETF Could Be the Best Choice for Beating the S&P 500 in 2024

Rexford Industrial Realty

The S&P 500 is at an all-time high, but not all stocks are expensive.

2 Dividend Stocks That Are Way Too Cheap to Ignore

The Vanguard Small-Cap Value Index Fund ETF is still underperforming the S&P500. The Fed might not be able to engineer a soft-landing due to the sticky inflation, and this does not favor a rotation to small cap value. The earnings growth expectation for small cap value stocks has been downgraded, while the PE multiple has risen.

VBR: The Elusive Catch-Up Trade In Small Cap Value Stocks

Vanguard S&P Mid-Cap 400 Growth ETF

Vanguard S&P Mid-Cap 400 ETF

Vanguard S&P Mid-Cap 400 Value ETF

Vanguard Small-Cap Growth

Vanguard U.S. Multifactor ETF

Vanguard U.S. Momentum Factor ETF

Vanguard U.S. Quality Factor ETF

Vanguard U.S. Value Factor ETF

Vanguard S&P Small-Cap 600 Growth ETF

Vanguard S&P Small-Cap 600 Value ETF

Vanguard Mid-Cap ETF

Vanguard Mid-Cap Value ETF

Vanguard S&P 500 ETF

Vanguard Mid-Cap Growth ETF

Vanguard FTSE All-World ex-US Small-Cap ETF

Vanguard Total Stock Market ETF

Vgd Rsl2000 Grw Shs

Vanguard Russell 2000 ETF

Vanguard Russell 2000 Value ETF

Vanguard Extended Market ETF

With so many small and mid-cap ETFs out there, which might be the best to own right now. I'll restrict this analysis to Vanguard ETFs which seem to have a reasonable exchange policy and which offers among the best returns over the long term. My top choices are based on which Vanguard ETF have shown the best returns over the last five years, with the admonition that past returns may not predict the future.

Vanguard Has 17 Small And Mid-Cap ETFs. Which Are Best Right Now?

Invesco S&P 500 Equal Weight ETF

Vanguard High Dividend Yield ETF

The S&P 500 has delivered total returns of about 45% since the 2022 bear market bottom. Despite the strong market performance, there are some areas of the stock market that look rather cheap.

Missed Out On the Bull Market Recovery? 3 ETFs You Can Buy Today.

Vanguard Small-Cap ETF

Vanguard S&P 500 Growth ETF

One of these Vanguard ETFs allows you to throw everything in the mix. Two others provide opportunities to invest in the S&P 500 stocks.

5 Vanguard ETFs That Could Be Millionaire-Makers

Launched on 01/26/2004, the Vanguard Small-Cap Value ETF (VBR) is a passively managed exchange traded fund designed to provide a broad exposure to the Small Cap Value segment of the US equity market.

Should Vanguard Small-Cap Value ETF (VBR) Be on Your Investing Radar?

iShares Morningstar Small-Cap Value ETF

Two similar ETFs focus on a group of stocks that have delivered exceptional returns over the long term. Based on the historical average annual returns, investing $100 each month could grow to $2.2 million over time.

2 ETFs That Could Turn $100 Per Month Into $2.2 Million With Little Effort Required

The Vanguard Small-Cap Value ETF is an often overlooked gem. The attractive valuations of small-cap stocks and the prospect of interest rate cuts make this fund especially appealing now.

A New S&P 500 Bull Market Is Officially Here: Here's 1 Magnificent ETF to Buy Hand Over Fist Right Now

The Fed's pivot towards a more dovish stance has created an opportunity to buy small cap value stocks. Small cap value stocks are expected to have strong earnings growth in 2024 at 26%. The ETF VBR, which tracks small cap value stocks, is currently cheap at 10.9x ttm PE ratio.

It's Time To Start Loading Up On Small Cap Value Stocks And VBR Should Perform Well

Apollo Senior Floating Rate Fund

Avantis International Small Cap Value ETF

Avantis US Large Cap Value ETF

Avantis U.S. Small Cap Value ETF

Invesco Senior Loan ETF

Global X MLP & Energy Infrastructure ETF

Vanguard Value ETF

Vanguard Total International Stock ETF

Vanguard International High Dividend Yield ETF

Energy Select Sector SPDR Fund

Undervalued industries, regions, and equity market segments offer investors the potential for strong, market-beating returns. There are ETFs tracking most of these. An overview of these follows.

Most Undervalued Asset Classes, Equity Industries, Segments, And Regions - 2024

The Vanguard Small-Cap Value Index Fund ETF could be poised for big gains in 2024. The Vanguard Small-Cap Index Fund ETF should benefit from potential interest rate cuts later this year.

My 3 Favorite ETFs to Buy Right Now

Choosing which ETFs to buy is only one part of the equation. I reveal my strategy for investing in ETFs.

2 Top ETFs I'm Planning to Buy Hand Over Fist in 2024

iShares U.S. Pharmaceuticals ETF

iShares Russell 2000 ETF

Invesco KBW High Dividend Yield Financial ETF

NVIDIA

VanEck Vectors Semiconductor ETF

SPDR Portfolio S&P 500 High Dividend ETF

The January effect, while a famous market anomaly, is not as straightforward as it may seem. While Wall Street has been muted at the start of this year, it now seems that the anomaly has started to take place.

Has the January Effect Finally Taken Off? ETFs in Focus

Pacer US Small Cap Cash Cows 100 ETF

Schwab U.S. Small-Cap ETF

SPDR S&P 600 Small Cap Growth ETF

Small-cap stocks could be poised for a trend reversal in 2024. One way to play a potential rally in this segment is to buy an exchange-traded fund focusing on small-cap stocks.

What Is the Best Small-Cap ETF to Buy?

Vanguard Total Bond Market ETF

Vanguard Intermediate-Term Treasury ETF

Investors still love the Vanguard 500 ETF, adding tens of billions of dollars to their holdings. They also love a pair of Vanguard bond ETFs, but one is a better choice for most investors.

3 Vanguard ETFs Investors Couldn't Get Enough of in 2023 and the 1 I'd Buy for 2024

iShares Core S&P 500 ETF

Janus Henderson Group

SPDR S&P 500 ETF Trust

S&P 500 ETFs are perennial favorites. However, small-cap ETFs could be poised to deliver especially strong returns.

What's the Best ETF to Buy Right Now?

SPDR Portfolio Small Cap ETF

The Vanguard 500 S&P 500 ETF has produced solid returns for investors in 2023. But the tide might be turning in favor of small-cap stocks.

Before You Buy Vanguard's S&P 500 ETF, Here Are 3 I'd Buy First

JPMorgan BetaBuilders U.S. Small Cap Equity ETF

Dimensional US Small Cap ETF

WisdomTree Emerging Markets SmallCap Dividend Fund

iShares MSCI Emerging Markets Small Cap ETF

iShares MSCI Brazil Small-Cap ETF

Small-cap ETFs are long-term outperformers – and should be on every investors' radar.

9 Small-Cap ETFs to Buy Now

Invesco S&P SmallCap 600 Pure Value ETF

ProShares Russell 2000 Dividend Growers ETF

Legg Mason Small-Cap Quality Value ETF

iShares US Small Cap Value Factor ETF

The small-cap index Russell 2000 recently witnessed its most impressive week in over two years as investors bet on the Federal Reserve's halt in its interest rate hike cycle.

7 Factors Why Small-Cap Value ETFs May Rise Ahead

Vanguard Growth ETF

Over the last three decades, exchange-traded funds have become an extremely popular investing vehicle. Vanguard ETFs tend to sport low fees and comparable levels of performance relative to rival offerings.

2 Vanguard ETFs to Buy and Hold Forever

The Vanguard Small-Cap Value Index Fund ETF offers an easy way to invest in a basket of small-cap value stocks. Small-cap value stocks have historically outperformed other types of stocks.

1 No-Brainer ETF to Buy in October

VBR is a simple U.S. small-cap value index fund. VBR has underperformed YTD, as have most other small-cap value funds. An explanation of why follows.

News for Vanguard Small Cap Value ETF ETF (VBR)