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Should Vanguard SmallCap Growth ETF (VBK) Be on Your Investing Radar?
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Launched on 01/26/2004, the Vanguard SmallCap Growth ETF (VBK - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Small Cap Growth segment of the US equity market.
The fund is sponsored by Vanguard. It has amassed assets over $16.77 billion, making it the largest ETFs attempting to match the Small Cap Growth segment of the US equity market.
Why Small Cap Growth
There's a lot of potential to investing in small cap companies, but with market capitalization below $2 billion, that high potential comes with even higher risk.
Qualities of growth stocks include faster growth rates compared to the broader market, as well as higher valuations and higher than average sales and earnings growth rates. Something to keep in mind is the higher level of volatility that is affiliated with growth stocks. They are likely to outperform value stocks in strong bull markets but over the longer-term, value stocks have delivered better returns than growth stocks in almost all markets.
Costs
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.07%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.39%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Information Technology sector--about 27.80% of the portfolio. Healthcare and Industrials round out the top three.
Looking at individual holdings, Slcmt1142 accounts for about 1.39% of total assets, followed by Bio-Techne Corp. (TECH - Free Report) and Entegris Inc. (ENTG - Free Report) .
Performance and Risk
VBK seeks to match the performance of the CRSP U.S. Small Cap Growth Index before fees and expenses. CRSP U.S. Small Cap Growth Index measures the investment return of small-capitalization growth stocks.
The ETF has gained about 11.87% so far this year and it's up approximately 28.87% in the last one year (as of 10/25/2021). In the past 52-week period, it has traded between $216.78 and $302.04.
The ETF has a beta of 1.15 and standard deviation of 26.57% for the trailing three-year period, making it a medium risk choice in the space. With about 713 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard SmallCap Growth ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, VBK is a great option for investors seeking exposure to the Style Box - Small Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares S&P SmallCap 600 Growth ETF (IJT - Free Report) and the iShares Russell 2000 Growth ETF (IWO - Free Report) track a similar index. While iShares S&P SmallCap 600 Growth ETF has $6.09 billion in assets, iShares Russell 2000 Growth ETF has $12.10 billion. IJT has an expense ratio of 0.18% and IWO charges 0.24%.
Bottom-Line
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Should Vanguard SmallCap Growth ETF (VBK) Be on Your Investing Radar?
Launched on 01/26/2004, the Vanguard SmallCap Growth ETF (VBK - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Small Cap Growth segment of the US equity market.
The fund is sponsored by Vanguard. It has amassed assets over $16.77 billion, making it the largest ETFs attempting to match the Small Cap Growth segment of the US equity market.
Why Small Cap Growth
There's a lot of potential to investing in small cap companies, but with market capitalization below $2 billion, that high potential comes with even higher risk.
Qualities of growth stocks include faster growth rates compared to the broader market, as well as higher valuations and higher than average sales and earnings growth rates. Something to keep in mind is the higher level of volatility that is affiliated with growth stocks. They are likely to outperform value stocks in strong bull markets but over the longer-term, value stocks have delivered better returns than growth stocks in almost all markets.
Costs
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.07%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.39%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Information Technology sector--about 27.80% of the portfolio. Healthcare and Industrials round out the top three.
Looking at individual holdings, Slcmt1142 accounts for about 1.39% of total assets, followed by Bio-Techne Corp. (TECH - Free Report) and Entegris Inc. (ENTG - Free Report) .
Performance and Risk
VBK seeks to match the performance of the CRSP U.S. Small Cap Growth Index before fees and expenses. CRSP U.S. Small Cap Growth Index measures the investment return of small-capitalization growth stocks.
The ETF has gained about 11.87% so far this year and it's up approximately 28.87% in the last one year (as of 10/25/2021). In the past 52-week period, it has traded between $216.78 and $302.04.
The ETF has a beta of 1.15 and standard deviation of 26.57% for the trailing three-year period, making it a medium risk choice in the space. With about 713 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard SmallCap Growth ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, VBK is a great option for investors seeking exposure to the Style Box - Small Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares S&P SmallCap 600 Growth ETF (IJT - Free Report) and the iShares Russell 2000 Growth ETF (IWO - Free Report) track a similar index. While iShares S&P SmallCap 600 Growth ETF has $6.09 billion in assets, iShares Russell 2000 Growth ETF has $12.10 billion. IJT has an expense ratio of 0.18% and IWO charges 0.24%.
Bottom-Line
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.