Key Points

The Vanguard Small-Cap ETF and iShares Morningstar Small-Cap ETF both provide broad exposure to small-cap stocks with very low expense ratios.
The iShares Morningstar Small-Cap ETF delivered a slightly higher 1-year total return, though the Vanguard Small-Cap ETF has significantly more assets under management.
The Vanguard Small-Cap ETF currently holds fewer securities than the iShares Morningstar Small-Cap ETF, while maintaining a slightly lower beta profile.

Those looking to spread investments beyond mega-cap dominance often choose small-cap funds to access potential future industry leaders. Small-cap equities frequently offer stronger growth prospects than large-caps, yet they come with greater price fluctuations.

Both Vanguard Small-Cap ETF (NYSEMKT:VB) and iShares Morningstar Small-Cap ETF (NYSEMKT:ISCB) focus on this market segment, granting low-cost entry to hundreds of smaller U.S. firms often missed by major benchmarks.

The Vanguard Small-Cap ETF supplies strong liquidity and a reduced expense ratio, whereas the iShares Morningstar Small-Cap ETF supplies wider diversification across more than 1,500 holdings along with a modestly higher trailing dividend yield.

Snapshot (cost and size)

Metric	VB	ISCB
Issuer	Vanguard	iShares
Expense ratio	0.03%	0.04%
1-yr return (as of June 17, 2026)	29.90%	31.60%
Dividend yield	1.20%	1.30%
Beta	1.04	1.05
AUM	$182.7 billion	$286.2 million

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.

The Vanguard fund holds a minor cost edge at 0.03% expense ratio versus 0.04% for the iShares fund. Although one basis point appears minor, it may affect long-term compounding for larger portfolios. Yields remain close, with ISCB at 1.30% and VB at 1.20% over the past 12 months.

Performance and risk comparison

Metric	VB	ISCB
Max drawdown (5 yr)	(28.20%)	(29.90%)
Growth of $1,000 over 5 years (total return)	$1,446	$1,368

What is inside

The iShares Morningstar Small-Cap ETF holds 1,544 stocks, tracking an index meant to reflect smaller U.S. company performance. This wide spread reduces the effect of any single stock decline on overall results.

Sector weights for the iShares fund feature industrials at 18%, financial services at 16%, and technology at 15%. Largest holdings include Lumentum Holdings (NASDAQ:LITE) at 0.99%, Revolution Medicines (NASDAQ:RVMD) at 0.46%, and Ati (NYSE:ATI) at 0.42%. Launched in 2004, the fund distributed $0.95 per share over the trailing 12 months.

By comparison, the Vanguard Small-Cap ETF owns 1,357 securities and tracks the CRSP U.S. Small Cap Index via full replication. Sector allocations differ slightly, showing higher industrials at 21% and technology at 17%, with financial services at 13%. Leading positions include Flex Ltd (NASDAQ:FLEX) at 0.69%, Astera Labs (NASDAQ:ALAB) at 0.62%, and Ciena Corp (NYSE:CIEN) at 0.51%. Also launched in 2004, the Vanguard fund paid a trailing-12-month dividend of $3.50 per share.

For additional ETF guidance, consult detailed investment resources.

What this means for investors

Incorporating small-cap stocks into a portfolio provides access to high-growth firms that are rarely household names, such as Astera Labs. Funds like the iShares Morningstar Small-Cap ETF (ISCB) and Vanguard Small-Cap ETF (VB) offer an efficient route to these companies. Choosing between them depends on several factors.

ISCB features a modestly higher dividend yield appealing to income seekers and posted stronger one-year results. Its over 1,500 holdings grant broader small-cap coverage. Yet smaller firms tend to fluctuate more than large-caps, so greater holdings can elevate risk, as seen in ISCB's larger max drawdown.

VB's primary edge lies in its much larger AUM, which boosts liquidity and supports narrower bid-ask spreads to lower trading costs. Vanguard also reduced VB's expense ratio in April, enhancing its cost efficiency beyond the already low ISCB level. Thus VB suits investors planning long-term buy-and-hold strategies.

Should you buy stock in iShares Trust - iShares Morningstar Small-Cap ETF right now?

Before purchasing shares in iShares Trust - iShares Morningstar Small-Cap ETF, review this:

The Motley Fool Stock Advisor team recently highlighted what they view as the 10 best stocks for investors to acquire now, and iShares Trust - iShares Morningstar Small-Cap ETF did not appear. The 10 selected stocks may deliver substantial gains ahead.

Note that when Netflix appeared on the list December 17, 2004, a $1,000 investment then would now equal $417,305! Similarly, when Nvidia joined April 15, 2005, that same $1,000 would now total $1,293,148!

Stock Advisor's overall average return stands at 936% - far exceeding the S&P 500's 207%. Do not overlook the current top 10 list, accessible via Stock Advisor, and join a community of individual investors.

See the 10 stocks.

Stock Advisor returns as of June 19, 2026.

Robert Izquierdo holds positions in Astera Labs. The Motley Fool holds positions in and recommends Ciena and Lumentum. The Motley Fool recommends Astera Labs, Ati, and Flex. The Motley Fool maintains a disclosure policy.

The views and opinions expressed here belong to the author and may not align with those of Nasdaq, Inc.