Comparing iShares Morningstar Small Cap ETF and Vanguard Small Cap ETF
The iShares Morningstar Small Cap ETF (ISCB +1.37%) and the Vanguard Small Cap ETF (VB +1.17%) aim to tap into the growth potential of small to mid-sized businesses in the United States. Established in 2004, both funds have unique characteristics. Vanguard has managed to amass a substantial $182.7 billion in assets, while ISCB offers a more specialized approach, potentially appealing to those looking for different sector allocations.
Snapshots (Cost and Size)
| Metric | VB | ISCB |
|---|---|---|
| Publisher | Vanguard | iShares |
| Expense Ratio | 0.03% | 0.04% |
| 1-Year Return (as of June 12, 2026) | 29.10% | 30.43% |
| Dividend Yield | 1.19% | 1.27% |
| Beta | 1.14 | 1.17 |
| Assets | $182.7 billion | $275.1 million |
Note: Beta indicates price volatility compared to the S&P 500, calculated from five years of monthly returns. The one-year return reflects total returns over the following year, and the dividend yield represents the trailing 12-month distribution yield.
VB’s expense ratio stands a bit lower at 0.03%, whereas ISCB is at 0.04%. Conversely, if you’re seeking income, ISCB offers a slightly better dividend yield of 1.27% compared to VB’s 1.19%.
Performance and Risk Comparison
| Metric | VB | ISCB |
|---|---|---|
| Maximum Drawdown (5 years) | (28.16%) | (29.93%) |
| $1,000 Growth in 5 Years (Total Return) | $1,358 | $1,288 |
What’s Inside
ISCB tracks a benchmark representing small-cap U.S. stocks, containing over 1,500 holdings. The fund’s highest sector allocations include Industrials at 18.5%, Technology at 16.0%, and Financial Services at 15.6%. Major holdings feature Lumentum Holdings Co., Ltd. (Light 2.24% at 1.0%), Revolution Medicines Inc. (RVMD +3.31% at 0.5%), and Sterling Infrastructure (STRL +2.89% at 0.4%).
VB mirrors the CRSP US Small Cap Index with 1,310 stocks. This fund allocates 20.6% to industrial sectors, 19.4% to technology, and 12.3% to financial services. Noteworthy positions include Flex (Flex +2.96% at 0.7%), Astera Research Institute (ALAB +11.28% at 0.6%), and Sienna Corporation (Sien 2.05% at 0.5%).
What This Means for Investors
This comparison ultimately leads individual investors to some important considerations. Key questions revolve around costs, desired sector exposure in small caps, and the emphasis on income.
In terms of cost, VB presents a slight edge with its 0.03% expense ratio, which is among the lowest available. Over time, even small fee differences can have a significant effect on returns, making VB a serious option for cost-minded, long-term investors.
However, these two funds aren’t carbon copies of each other. Both lean towards industrials and technology—sectors that have traditionally rewarded patient investors—but ISCB has a greater leaning towards financials compared to VB. Adding to that, ISCB’s slightly higher dividend yield might be appealing for some. Still, when weighing these two similar options, VB’s better five-year return and lower costs could sway most investors’ decisions.
It’s worth noting that small-cap stocks tend to carry more volatility than their large-cap counterparts. Thus, investors should brace themselves for a potentially bumpier journey compared to, say, an S&P 500 index fund. Yet, the historical trend has shown that smaller companies often outperform over extensive periods, suggesting that both ETFs have a significant role to play in a diverse, long-term investment strategy.
