Key Points
RZG charges a higher expense ratio and manages a much smaller asset base than VBK.
Both funds delivered nearly identical one-year returns and similar risk-adjusted drawdowns.
RZG holds fewer stocks and leans more on healthcare, while VBK splits exposure among technology, industrials, and healthcare.
The Vanguard Small-Cap Growth ETF(NYSEMKT:VBK) and Invesco S&P SmallCap 600 Pure Growth ETF(NYSEMKT:RZG) both target small-cap U.S. growth stocks, but differ in cost, portfolio breadth, and sector emphasis.
Both VBK and RZG aim to capture the growth potential of U.S. small-cap companies, but they follow distinct index strategies and carry notable differences in fees, diversification, and trading scale.
This comparison highlights where each ETF stands out, as well as potential frictions for investors seeking exposure to small-cap growth stocks.
Snapshot (cost & size)
| Metric | VBK | RZG |
|---|---|---|
| Issuer | Vanguard | Invesco |
| Expense ratio | 0.05% | 0.35% |
| 1-yr return (as of 2026-04-22) | 43.4% | 43.1% |
| Dividend yield | 0.5% | 0.4% |
| Beta | 1.18 | 1.16 |
| AUM | $38.7 billion | $119.1 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.
RZG charges a 0.35% expense ratio — 0.30 percentage points higher than VBK — making VBK the more affordable option for cost-conscious investors. VBK also pays a modestly higher dividend yield at 0.5%, compared to RZG's 0.4%.
Performance & risk comparison
| Metric | VBK | RZG |
|---|---|---|
| Max drawdown (5 y) | -38.39% | -38.31% |
| Growth of $1,000 over 5 years | $1,204 | $1,248 |
What's inside
RZG tracks a concentrated basket of 130 U.S. small-cap stocks, focusing on companies with the strongest growth metrics in the S&P SmallCap 600 universe. Healthcare is the largest sector at 23%, followed by technology and industrials at 17% each. Its top holdings — Powell Industries(NASDAQ:POWL), Argan(NYSE:AGX), and ACM Research(NASDAQ:ACMR) — each make up less than 2% of assets, and the fund has a 20-year track record. The index is rebalanced annually, and there are no leverage or ESG screens.
VBK, by comparison, holds a far broader portfolio with 579 small-cap growth stocks, spreading risk across technology (24%), industrials (24%), and healthcare (17%). Top positions include TechnipFMC(NYSE:FTI), Ciena(NYSE:CIEN), and Casey's General Stores(NASDAQ:CASY), each with less than 1% weight. This approach results in even greater diversification and minimal concentration risk.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
For investors seeking exposure to small-cap stocks, the Vanguard Small-Cap Growth ETF (VBK) and Invesco S&P SmallCap 600 Pure Growth ETF (RZG) provide this, but each take different approaches that can affect which to invest in.
RZG targets high-growth companies as the means for capital appreciation. That’s why it invests in a finite set of small-cap stocks. It has a meaningfully lower AUM, which impacts liquidity, and a far higher expense ratio for a fund that is not actively managed. RZG is for investors who seek an ETF with the potential to outperform, although its recent performance is not very different from VBK’s for a greater cost.
VBK offers many compelling characteristics. Its one-year return, dividend yield and AUM are all higher than RZG at a much lower expense ratio. Its nearly 600 stocks provide better diversification, which helps to mitigate a decline in any given sector or set of stocks within its portfolio. However, it has a slightly higher beta and max drawdown over the past five years. Even so, VBK’s low cost, and greater diversification make it a good ETF for investors who want a small-cap focused fund to buy and hold for the long term.
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Robert Izquierdo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Ciena and Vanguard Index Funds - Vanguard Small-Cap Growth ETF. The Motley Fool recommends Casey's General Stores. The Motley Fool has a disclosure policy.
