A sound investment process and strong management team underpin Vanguard S&P Small-Cap 600 Growth ETF's Morningstar Medalist Rating of Silver. The portfolio maintains a sizable cost advantage over competitors, priced within the lowest fee quintile among peers.  

 The strategy merits an Above Average Process Pillar rating. The strategy’s management team earns an Above Average People Pillar rating. The strategy's parent organization earns the firm a High Parent Pillar rating. People, Process and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

Ensign Group

Allegheny Technologies

Fabrinet

SPS Commerce

Boise Cascade

SM Energy

Mueller Industries

AAON

Abercrombie & Fitch

Meritage Homes

The S&P SmallCap 600 Growth Index assigns a growth and value score to each stock in the S&P SmallCap 600 Index. It allocates the fastest-growing third to the growth index, while it sweeps the cheapest third into the S&P SmallCap 600 Value Index. The approach splits the middle third between the two indexes based on their style traits until the market cap for each amounts to approximately half of the S&P SmallCap 600 Index.

This approach admits some cheaper names into the growth index, improving its breadth across the value-growth spectrum. Almost 30% of its portfolio overlaps with the S&P SmallCap 600 Value Index.

S&P requires all new entrants to be profitable to join the index. This should reduce the number of struggling companies included in the portfolio and should give the fund a modest quality tilt. Tiny and unprofitable firms usually perform best during market rallies, but they also tend to fall especially quickly when markets sour. This extra step is unique among index fund peers and should effectively control risk in an otherwise risky category.

The portfolio features smaller companies than most of its peers in the small-growth category. This fund's average market cap was just $2.9 billion as of January 2024, or around half that of the typical peer. The average constituent size is smaller because this index is filled only after its larger siblings, the S&P MidCap 400 Index and S&P 500, claim the largest 900 profitable companies in the US. As of July 2023, only stocks with market caps between $850 million and $5.2 billion qualified for the S&P SmallCap 600 Index.

The fund's broad reach minimizes stock-specific risk. The portfolio usually holds around 350 stocks with less than 12% of fund assets allocated to its largest 10. Market-cap weighting contributes to this excellent diversification, minimizing the risk of a single stock having an outsize impact on fund performance. No one position claims more than 1% of the portfolio.

The portfolio's sector composition looks a little different than its average peer because of its smaller size and the cheaper stocks that it holds. Tighter market-cap constraints than most peers mean that the fund does not hold some stocks common to competitor portfolios, further shaping portfolio differences relative to the category average. The fund has underweighted technology and healthcare stocks in recent years while overweighting cyclical and real estate companies relative to the category norm. These differences will drive differences in short-term returns. But the fund’s small size, low fee, and sound diversification should carve out a durable advantage over the long term.

Note: The Process Pillar rating and analysis are indirectly assigned by an analyst. When an analyst covers a passively managed vehicle that tracks a particular index, Morningstar associates the Process Pillar rating assigned to that vehicle with the index concerned. Morningstar then maps the Process Pillar associated with a given index to any other uncovered passive strategies that track the same index. This ensures that the analyst’s view is leveraged whenever available and promotes consistency when analyzing passive vehicles associated with a given index.

Above Average

Process

Vanguard S&P Small-Cap 600 Gr Idx Fund benefits considerably from its equity team, earning it an Above Average People Pillar rating. There are two managers listed on the fund: Kenny Narzikul, Nick Birkett. The team is largely unproven, as its members only average two years of portfolio management experience. Together, they manage a total of six strategies, with a Silver asset-weighted average Morningstar Medalist Rating, demonstrating their potential to deliver positive alpha relative to the category median in aggregate. The team has lacked continuity recently, with Donald Butler leaving in the last two months, detracting from its rating. Even though it is a passive fund, high turnover can still hinder the effectiveness of the investment process. 

 Note: This People Pillar rating is indirectly assigned by an analyst. Morningstar analysts evaluate the People Pillar for passive products at the brand level and may also differentiate by asset class. There is at least one other passive strategy at the firm that is covered by a Morningstar analyst, so the People Pillar rating of the fund is inherited from the rating that the Morningstar analyst assigned to investment vehicles under the same brand name.

People

The Vanguard Group retains a High Parent rating. 

Mutual ownership, low costs, and a direct-to-investor playbook have helped spur Vanguard's leadership within the United States. Client service missteps notwithstanding, Vanguard over the past decade has grown its market share of U.S. open-end and exchange-traded fund assets at about a 5% annualized clip. At that rate, Vanguard's portion of the U.S. industry will cross 50% around 2035.

True, some competitors can now match or even undercut Vanguard on fees for broad market exposure. But Vanguard's burgeoning advice business could help it keep or even extend that lead. Through Digital Advisor and Personal Advisor Services, Vanguard has built an increasingly compelling ecosystem of advice for investors with simple to complex needs.

Vanguard is also using its advice business to expand overseas, but that's a work in progress. Of Vanguard's USD 7.6 trillion in global assets under management in March 2023, non-U.S. investors owned less than 10%, a figure that has changed little in recent years. Strategic shifts in China and other markets account for the slow pace, including returning money to institutions that had been layering on fees. Vanguard hopes to recoup that money and more by focusing on individual investors and the advisors who serve them. Provided Vanguard sticks to its playbook, its advantages should translate into success abroad, too.

High

Parent

Vanguard S&P Small-Cap 600 Growth ETF

VIOG tracks a market-cap-weighted index of US small-cap companies characterized by strong growth factors.

Designed to provide broad exposure to the Small Cap Growth segment of the US equity market, the Vanguard S&P Small-Cap 600 Growth ETF (VIOG) is a passively managed exchange traded fund launched on 09/09/2010.

Should Vanguard S&P Small-Cap 600 Growth ETF (VIOG) Be on Your Investing Radar?

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 Small Cap Value ETF

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 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?

Vanguard S&P Small-Cap 600 Growth Index Fund ETF holds 300+ small caps showing high growth metrics relative to peers. The portfolio is well diversified, and quality metrics and performance since inception are superior to the benchmark. Another small-cap growth ETF by Vanguard, VBK, has a similar performance, a lower fee, and higher trading volumes.

VIOG: No Competitive Advantage Over VBK

iShares Core S&P Small Cap ETF

Invesco S&P SmallCap 600 Pure Growth ETF

Invesco DB US Dollar Index Bullish Fund

Vanguard Small-Cap ETF

Vanguard S&P Small-Cap 600 ETF

Decent U.S. GDP growth, a less-hawkish Fed, upbeat holiday season sales, cheaper valuation of small-caps and potential M&A activities should drive small-cap ETFs higher in 2024.

Are Small-Cap ETFs Poised to Surge in 2024?

Janus Henderson Small Cap Growth Alpha ETF

Decent U.S. GDP growth, a less-hawkish Fed, upbeat holiday season sales, cheaper valuation of small-caps and potential M&A activities should drive small-cap ETFs higher in the winter months.

Why to Buy Small-Cap ETFs for Winter Months?

iShares Russell 2000 ETF

The recent rally in small-cap stocks, coupled with encouraging inflation data and valuation discrepancies, indicates a potentially favorable environment for investors in this sector.

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First Trust Water ETF

Invesco Nasdaq 100 ETF

VanEck Vectors Semiconductor ETF

Consumer Staples Select Sector SPDR Fund

Wall Street witnessed the second-largest bank failure in U.S. history last week. A crypto-centric bank too failed.

3 Reasons Why Markets Could Rally Higher

iShares S&P 500 Growth ETF

iShares Russell 1000 Growth ETF

Vanguard S&P 500 Growth ETF

Vanguard Growth ETF

The rebalancing resulted in the growth indexes being overweight in energy and health care.

Growth ETFs Diverge Significantly After S&P Rebalance

Plus, iShares added an emerging market bond ETF to its lineup at the end of the week.

Odds & Ends: 6 Vanguard ETFs to See Share Splits

VIOG invests in U.S. small-cap growth stocks in the S&P 600 Index. The fund's total return was inferior to its large-cap growth peer.

VIOG: Its Large-Cap Growth Peer Would Be A Better Choice

VALLEY FORGE, Pa. , Feb. 22, 2023 /PRNewswire/ -- Vanguard today announced plans to execute forward share splits for six equity ETFs.

Vanguard Announces Share Splits for Six Equity ETFs

Should Vanguard S&P SmallCap 600 Growth ETF (VIOG) Be on Your Investing Radar?

Avantis U.S. Small Cap Value ETF

Diversified Healthcare Trust

Landec

Movado Group

Tenable Holdings Inc

Vista Oil & Gas SAB de CV

While broader markets face continued pressure amid recession fears, small-cap stocks stand out as an undervalued segment of the stock market. The Russell 2000 index, the popular benchmark for small-cap stocks, is currently down 18% over the past year.

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iShares S&P Mid-Cap 400 Value ETF

iShares S&P Mid-Cap 400 Growth ETF

iShares S&P Small-Cap 600 Value ETF

iShares S&P Small-Cap 600 Growth ETF

iShares S&P 500 Value ETF

Vanguard S&P 500 Value ETF

The style-box updates feature the iShares ETFs since for the mid-quarter updates, the performance data on the benchmarks is not available until the end of every month, and then reported after a day or two delay. In 2021, mid and small-cap value finally beat their growth brethren, but in large-cap, growth continues to be the king.

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iShares Transportation Average ETF

VanEck Vectors Retail ETF

Vanguard High Dividend Yield ETF

Industrial Select Sector SPDR Fund

Health Care Select Sector SPDR Fund

Wall Street has been hovering around a record high level. Holiday season, chances of more antiviral pills, Biden's infrastructure plan, upbeat U.S. economic growth momentum and upbeat earnings are likely to extend the rally.

Wall Street Still Has Room to Run: ETFs to Play

This small-cap growth ETF hits a new 52-week high. Are more gains in store for this ETF?

Small-Cap Growth ETF (VIOG) Hits New 52-Week High

Alkermes

Aptargroup

Pacer US Export Leaders ETF

ResMed

Standard Motor Products

Tempur Sealy International

As the craze for meme stocks fades away, investors should consider growth investing to generate big returns. Here are 7 growth stocks to buy today.

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Vanguard Total Bond Market ETF

iShares Russell Top 200 Growth ETF

ProShares Global Listed Private Equity ETF

Invesco NASDAQ Next Gen 100 ETF

Schwab Emerging Markets Equity ETF

Financial Select Sector SPDR Fund

Whenever you're ready to invest in index funds, these seven ETFs deserve to be on your radar and possibly in your portfolio. The post 7 Index Funds to Buy For March appeared first on InvestorPlace.

7 Index Funds to Buy For March

Axcelis Technologies

A10 Networks

Ultra Clean

The stock market pull back has created a buying opportunity in technology. But you'll find better values in the small caps, not the bigs.

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Group 1 Automotive

iShares Russell 2000 Growth ETF

Malibu Boats

NeoPhotonics

Office Depot

SPDR S&P 600 Small Cap Growth ETF

VirTra

January is truly the time to get in on small-cap securities with the above-mentioned ETFs and stocks, assuming that the historical trend holds true in 2020.

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Janus Henderson Small/Mid Cap Growth Alpha ETF

Goldman Sachs sees risks of recession in the U.S. economy over the one-year timeframe slip to just 10%.

Recession Fear Negligible: Will Small-Cap Growth ETFs Rally?

News for Vanguard S&P Small-Cap 600 Growth ETF ETF (VIOG)