Vanguard S&P Small-Cap 600 Index’s low fee, broad diversification, and profitability tilt make it hard to beat. The fund earns a Morningstar Medalist Rating of Silver.
The fund tracks the S&P SmallCap 600 Index, which represents the smallest 600 stocks in the S&P 1500 composite index. An index committee determines the portfolio. It selects constituents based on their market cap, liquidity, and profitability. The final portfolio weights each stock by its float-adjusted market capitalization. 
Market-cap weighting is an efficient way to allocate the portfolio because it harnesses the market’s consensus opinion of each stock’s relative value. Faster-growing companies take up a larger share of the portfolio, while smaller companies that may be struggling take on a less important role. This helps rein in turnover and the associated trading costs.
The S&P SmallCap 600 Index operates at the smaller end of the small-cap market. Its average holding size was just under $2 billion as of May 2023, less than half of the Morningstar Category average. Small-cap stocks tend to be more volatile than their larger peers. However, the fund’s parent index only includes profitable names, which removes the lowest-quality small-cap stocks and contains volatility.
While the smaller names that constitute this portfolio can be volatile, the strategy’s broad reach ensures that one stock’s misfortune should not derail the entire portfolio. It stashes just 6% of its assets in its top 10 holdings. That breadth helped the ETF share class return a sturdy 10.9% annually from its 2010 inception through May 2023, more than 2 percentage points better than the small blend category average.

Analyst Rating

Controls risk in the U.S. small-cap market.

Analyst

Zachary Evens

Ensign Group

Fabrinet

SPS Commerce

Allegheny Technologies

Meritage Homes

Abercrombie & Fitch

Mueller Industries

Boise Cascade

Installed Building Products

AAON

A preference for profitable firms and sound diversification should minimize the risks of the strategy's smaller orientation. 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 Pillar Rating. 
Kenny Narzikul is the sole named manager on this strategy. Narzikul replaced longtime managers William Coleman and Donald Butler in February 2023. Narzikul, while a recent addition, has been with Vanguard for more than a decade and was an assistant portfolio manager for three years before graduating to become a named manager.
The manager is 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 improve index tracking while reducing managers' workload. Vanguard frequently rotates its managers to promote breadth and depth across the team. Its independent risk management team works closely with the managers to monitor trades and review any potential issues. 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 S&P Small-Cap 600 ETF

VIOO tracks a market-cap-weighted index of 600 small-cap US stocks selected by an S&P Committee.

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

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

Small-caps need to make new highs for confirmation of a bull market, and the Vanguard S&P Small-Cap 600 Index Fund ETF is a way to play that. Investing in small-cap stocks offers advantages such as long-term outperformance, agility, innovation, undervalued opportunities, and diversification. VIOO is a passively managed ETF that replicates the performance of the S&P SmallCap 600 Index, with diversified holdings and a low expense ratio.

VIOO: Small-Caps Hold The Key

JPMorgan BetaBuilders U.S. Small Cap Equity ETF

iShares Core S&P Small Cap ETF

SPDR Portfolio Small Cap ETF

Invesco S&P SmallCap Momentum ETF

Growing optimism among U.S. small-business owners will lead to strong momentum in the small-cap space.

US Small Business Optimism Rises in December: 5 ETF Picks

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 Growth 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.

Small-Cap Rally in the Cards at Year-End & Beyond? ETFs in Focus

Vanguard S&P Small-Cap 600 ETF has an attractive valuation and strong growth profile. VIOO exhibits higher volatility than large-cap funds and may have more downside risks, especially during market turmoil. While VIOO has a strong long-term growth outlook, investors should exercise caution due to the potential for a recession coming soon.

VIOO: Attractive Valuation, And Strong Growth Profile, But A Recession May Not Be Far

Invesco Dividend Achievers ETF

Invesco S&P 500 Enhanced Value ETF

SPDR Portfolio S&P 500 High Dividend ETF

Vident Core US Equity Fund

Tech stocks have seen a stupendous rally this year helped by compelling valuation, a less-hawkish Fed and Artificial Intelligence (AI) hype. But the gamechanger AI is not going to knock on the door overnight.

Is It Time for Rotation Into Broad ETFs From Tech-Heavy Ones?

Vanguard S&P Mid-Cap 400 ETF

Historically, we have seen strong outperformance by the S&P 400. However, over the past 10 years, the S&P 500 has dominated the other two indices and is likely to do so in a recession.

S&P 600 Vs. S&P 400 Vs.

SPDR Bloomberg 1-3 Month T-Bill ETF

SPDR Gold Trust

Vanguard Total Stock Market ETF

Vanguard High Dividend Yield ETF

The last week has seen some potent volatility to put it mildly, but that hasn't stopped the ETF Issuer League from plugging along, headlined by some dramatic inflow numbers for Vanguard and some striking outflows for State Street's SPDR ETF suite.

ETF Issuer League: $17 Billion for Vanguard, Gold Up

iShares 0-3 Month Treasury Bond ETF

SPDR S&P 500 ETF Trust

WisdomTree Bloomberg Floating Rate Treasury Fund

ProShares Ultra VIX Short-Term Futures ETF

Vanguard S&P Small-Cap 600 Value ETF

iPath S&P 500 VIX Short-Term Futures ETN Class A

Another week on the books, and though the data may not have picked up all the recent banking-related uncertainty, equity ETFs were hovering around a potent milestone over the last week at about $5 trillion in total AUM.

Weekly Asset Flows: Equities at $5 Trillion, Treasuries Up

SPDR S&P Midcap 400 ETF Trust

SPDR S&P 600 Small Cap ETF

A $1.8 billion fund will be merged into a $5.2 billion fund.

State Street to Merge Small Cap ETFs into $7B Behemoth

Vanguard S&P Mid-Cap 400 Growth ETF

Vanguard S&P Mid-Cap 400 Value ETF

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

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 ETF (VIOO) Be on Your Investing Radar?

The Vanguard Small-Cap ETF (VB) invests based on the CRSP US Small Cap Index which contains over 1500 stocks. The Vanguard S&P Small-Cap 600 ETF (VIOO) invests based on the S&P SmallCap 600 Index which contains only 600 stocks.

VB Vs. VIOO: Comparing 2 Vanguard Small-Cap ETFs

Invesco Dynamic Semiconductors ETF

Invesco Dynamic Networking ETF

ProShares S&P Technology Dividend Aristocrats ETF

Industrial Select Sector SPDR Fund

SPDR S&P Retail ETF

Halloween Effect is a historically observed increase in stock prices from the month of November through the end of April.

Can ETFs Enjoy Halloween Effect Despite Rising Rate Fear?

Vanguard Russell 2000 ETF

The Russell 2000 has beaten its bigger peers in the past week.

Why Small-Cap ETFs Won in February & May See Success in March

Schwab U.S. Small-Cap ETF

As the economy rebounds from the Covid-19 pandemic, small-capitalization stocks and related exchange traded funds are not recovering as quickly in the face of ongoing financial concerns, supply chain hurdles, and hiring problems. Year-to-date, the iShares Core S&P Small-Cap ETF (IJR) fell 7.3%, Schwab U.S. Small-Cap (NYSEArca: SCHA) dropped 9.5%, iShares Russell 2000 ETF (IWM) fell [.

Small-Cap ETFs Could Continue to Struggle in Lingering Post-Pandemic Recovery

Amplify Travel Tech ETF

Fidelity MSCI Consumer Discretionary ETF

US Global Jets ETF

Invesco Dynamic Leisure and Entertainment ETF

Pfizer

Vanguard Energy ETF

The improved market sentiments have been leading to greater attention and confidence in reopening trades.

ETFs to Play the Reopening Trade as Omicron Fear Subsides

First Trust Financials AlphaDEX Fund

iShares Core S&P Total U.S. Stock Market ETF

iShares TIPS Bond ETF

United States Oil Fund LP

Omicron is believed to be less severe than Delta by some experts while President Biden is not planning to impose lockdown now. With economies and citizens having learnt to deal with COVID variants in the past two years, fresh global shutdown is less likely.

Why Reopening-Friendly ETFs Can be Bought on the Dip?

Wall Street may be hovering around a record high level but small-caps offer dirt cheap valuation. There are several other factors that support the small-cap rally, going forward.

Are Small Caps the Best Bets for 2022? ETFs in Focus

Invesco KBW Regional Banking ETF

With renewed optimism over a sustained economic recovery and robust corporate earnings growth, the small-cap space is set to explode higher.

4 Small-Cap ETFs & Stocks to Explode Higher

iShares S&P Small-Cap 600 Growth ETF

iShares Russell 2000 Growth ETF

SPDR S&P 600 Small Cap Growth ETF

Vanguard Small-Cap Growth

Considering the upbeat scenario around small-cap ETFs, let's glance through some funds that investors can bet on.

Here's Why Small-Cap ETFs Are Sizzling With Opportunities

iShares Core S&P U.S. Growth ETF

iShares MSCI USA Momentum Factor ETF

Invesco DWA Momentum ETF

Schwab U.S. Large-Cap Growth ETF

USAA MSCI USA Value Momentum Blend Index ETF

Vanguard Growth ETF

Invesco S&P MidCap Momentum ETF

Here we discuss certain ETF strategies to help investors gain from optimism surrounding the recovering U.S. economy from the pandemic-led slump despite surging delta variant cases.

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