Key Points
The iShares Morningstar Small-Cap ETF and Vanguard Small-Cap ETF both launched in 2004 and offer highly competitive expense ratios.
The Vanguard Small-Cap ETF manages $164.6 billion in assets under management (AUM), significantly more than the $267.9 million held by the iShares Morningstar Small-Cap ETF.
Both funds provide diversified small-cap exposure with over 1,300 holdings each but show different sector tilts in technology and healthcare.
The Vanguard Small-Cap ETF(NYSEMKT:VB) and iShares Morningstar Small-Cap ETF(NYSEMKT:ISCB) both offer low-cost access to small-capitalization stocks but vary significantly in assets under management (AUM) and sector weightings.
Investors often turn to small-cap funds to capture the growth potential of smaller American companies that are overlooked by large-cap indexes. Both of these ETFs offer broad diversification within the small-cap universe, yet their underlying index methodologies create distinct portfolio tilts and performance outcomes over time.
Snapshot (cost & size)
| Metric | VB | ISCB |
|---|---|---|
| Issuer | Vanguard | iShares |
| Expense ratio | 0.03% | 0.04% |
| 1-yr return (as of April 27, 2026) | 33.90% | 35.70% |
| Dividend yield | 1.20% | 1.30% |
| Beta | 1.06 | 1.07 |
| AUM | $164.6 billion | $267.9 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.
Both funds are exceptionally affordable for retail investors, though the Vanguard fund maintains a slight cost advantage with a 0.03% expense ratio. The iShares fund provided a higher payout over the trailing 12 months, yielding 1.30% compared to 1.20%.
Performance & risk comparison
| Metric | VB | ISCB |
|---|---|---|
| Max drawdown (five yr) | (28.20%) | (29.90%) |
| Growth of $1,000 over five years (total return) | $1,353 | $1,287 |
What's inside
The iShares Morningstar Small-Cap ETF, launched in 2004, manages 1,553 holdings with a portfolio focused on Industrials at 18%, Financial Services at 16%, and Healthcare at 14%. Its largest positions include Lumentum Holdings(NASDAQ:LITE) at 1.03%, Revolution Medicines(NASDAQ:RVMD) at 0.41%, and Albemarle(NYSE:ALB) at 0.36%. The fund paid $0.92 per share over the trailing 12 months.
The Vanguard Small-Cap ETF also launched in 2004 and provides exposure to 1,357 stocks while tracking the CRSP US Small Cap Index. Primary sector allocations include Industrials at 20%, Technology at 16%, and Financial Services at 13%. Top holdings include EMCOR Group(NYSE:EME) at 0.45%, NRG Energy(NYSE:NRG) at 0.42%, and Atmos Energy(NYSE:ATO) at 0.42%. The Vanguard fund has a trailing-12-month dividend of $3.50 per share.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
Including small-cap stocks in your portfolio is a great way to gain exposure to high-growth companies, and the Vanguard Small-Cap ETF (VB) and iShares Morningstar Small-Cap ETF (ISCB) help you achieve this. Both offer broad holdings of over 1,000 businesses at a low expense ratio. Deciding which to invest in depends on a few key considerations.
Over a third of ISCB’s holdings are concentrated in Industrials and Financial Services, which are sectors with less volatility and risk than Technology. Since small-cap stocks tend to hold higher risk than larger companies, ISCB’s industry focus is a consideration for conservative investors. However, the fund’s low AUM compared to VB translates into less liquidity for active traders.
One of VB’s strengths is its high AUM, and its large sector tilt towards Industrials at 20% give it stability as well. These and its slightly lower cost are the factors that make it stand out against ISCB, helping it deliver a lower max drawdown over the past five years and contributing to its higher long-term capital appreciation. As a result, VB is a good fund for investors who want to buy and hold for the long term.
Should you buy stock in iShares Trust - iShares Morningstar Small-Cap ETF right now?
Before you buy stock in iShares Trust - iShares Morningstar Small-Cap ETF, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and iShares Trust - iShares Morningstar Small-Cap ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $504,832!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,223,471!*
Now, it’s worth noting Stock Advisor’s total average return is 971% — a market-crushing outperformance compared to 202% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
*Stock Advisor returns as of May 1, 2026.
Robert Izquierdo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends EMCOR Group and Lumentum. The Motley Fool has a disclosure policy.
