Key Points
The Vanguard Small-Cap ETF (VB) holds twice as many holdings as the State Street SPDR Portfolio S&P 600 Small Cap ETF (SPSM).
Both funds maintain a matching expense ratio of 0.03%.
SPSM outperformed the Vanguard fund over the last year, posting a 33.70% total return compared to 25.90%.
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The Vanguard Small-Cap ETF (NYSEMKT:VB) offers exposure to twice as many holdings as the State Street SPDR Portfolio S&P 600 Small Cap ETF (NYSEMKT:SPSM), though both maintain a matching 0.03% expense ratio.
These funds provide low-cost access to U.S. small-capitalization stocks. While the Vanguard fund tracks a broad small-cap index for wide market exposure, the State Street fund follows the S&P SmallCap 600, which applies specific profitability criteria that can influence total returns.
Snapshot (cost & size)
| Metric | SPSM | VB |
|---|---|---|
| Issuer | SPDR | Vanguard |
| Share price | $56.84 (as of 2026-07-15) | $297.01 (as of 2026-07-15) |
| Expense ratio | 0.03% | 0.03% |
| 1-yr return (as of 2026-07-15) | 33.70% | 25.90% |
| Dividend yield | 1.40% | 1.20% |
| Beta | 1.08 | 1.10 |
| AUM | $17.1 billion | $188.2 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
Both ETFs are exceptionally affordable, with expense ratios of 0.03%. The State Street fund currently offers a slightly higher payout, providing a 0.20 percentage point yield advantage over its Vanguard counterpart for investors who prioritize current income.
Performance & risk comparison
| Metric | SPSM | VB |
|---|---|---|
| Max drawdown (5 yr) | (27.90%) | (28.20%) |
| Growth of $1,000 over 5 years (total return) | $1,488 | $1,486 |
What's inside
The Vanguard Small-Cap ETF tracks a broad basket of small companies with sector weights led by industrials at 20.00%, technology at 18.00%, and healthcare at 13.00%. It manages 1,307 holdings, and its largest positions include Credo Technology Group Holding Ltd at 0.54%, Jabil Inc at 0.49%, and Revolution Medicines Inc at 0.45%. This fund was launched in 2004.
VB has paid $3.61 per share over the trailing 12 months. On its recent $297.01 share price works out to a 1.20% yield.
The State Street SPDR S&P 600 Small Cap ETF targets a more concentrated group of 608 companies, focusing on financial services at 17.00%, industrials at 16.00%, and technology at 16.00%. Its top holdings include Molina Healthcare Inc at 0.69%, Brightspring Health Services at 0.61%, and Viasat Inc at 0.52%. It was launched in 2013.
SPSM has paid $0.79 per share over the trailing 12 months. At its recent $56.84 share price, the yield works out to 1.40%.
For more guidance on ETF investing, check out the full guide at this link.
What does this mean for investors?
These small-cap ETFs have delivered nearly identical returns and volatility over the past five years, although iShares (SPSM) has outperformed over the past year. They even have the same expense ratios. How does an investor decide between them?
Both are highly diversified across a broad range of holdings and sectors. It’s nice to see that neither fund has technology as its largest sector weighting. The Vanguard (VB) fund’s largest sector is industrials, while SPSM is financials. If the bull market broadens to non-tech sectors in the next few years, these funds stand to benefit.
Where Vanguard stands out is liquidity. It has a whopping $188 billion in net assets. iShares is adequately sized at around $17 billion, but VB wins on this score.
Vanguard is also more diversified, with over 1,300 holdings, compared to iShares’ 608. That’s impressive for Vanguard, since it has delivered almost the identical return as iShares over the past five years.
For an investor trying to decide between these small-cap funds, I’m not sure I would buy the iShares just because of its superior one-year trailing return. Looking from a higher point of view, Vanguard seems to have more checks on its side of the scorecard. It’s splitting hairs, but where these funds differ is in asset size and diversification. That favors the Vanguard over the iShares.
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John Ballard has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
