Launched on 09/09/2010, the Vanguard S&P Small-Cap 600 Growth ETF (VIOG Quick QuoteVIOG - 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 $1.05 billion, making it one of the average sized 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.

While growth stocks do boast higher than average sales and earnings growth rates, and they are expected to grow faster than the wider market, investors should note these kinds of stocks have higher valuations. 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 0.15%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 0.98%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Industrials sector--about 19.50% of the portfolio. Healthcare and Financials round out the top three.

Looking at individual holdings, Glaukos Corp (GKOS Quick QuoteGKOS - Free Report) accounts for about 1.20% of total assets, followed by Alaska Air Group Inc (ALK Quick QuoteALK - Free Report) and Ati Inc (ATI Quick QuoteATI - Free Report) .

The top 10 holdings account for about 5.5% of total assets under management.

Performance and Risk

VIOG seeks to match the performance of the S&P Small-Cap 600 Growth Index before fees and expenses. The S&P Small-Cap 600 Growth Index represents the growth companies of the S&P Small-Cap 600 Index.

The ETF has gained about 4.72% so far this year and is up roughly 14.63% in the last one year (as of 01/31/2025). In the past 52-week period, it has traded between $104.12 and $129.74.

The ETF has a beta of 1.12 and standard deviation of 21.81% for the trailing three-year period, making it a medium risk choice in the space. With about 343 holdings, it effectively diversifies company-specific risk.

Alternatives

Vanguard S&P Small-Cap 600 Growth ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, VIOG is a sufficient option for those seeking exposure to the Style Box - Small Cap Growth area of the market. Investors might also want to consider some other ETF options in the space.

The iShares Russell 2000 Growth ETF (IWO Quick QuoteIWO - Free Report) and the Vanguard Small-Cap Growth ETF (VBK Quick QuoteVBK - Free Report) track a similar index. While iShares Russell 2000 Growth ETF has $12.80 billion in assets, Vanguard Small-Cap Growth ETF has $20.42 billion. IWO has an expense ratio of 0.24% and VBK charges 0.07%.

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.