Launched on January 26, 2004, the Vanguard Small-Cap Value ETF (VBR Quick QuoteVBR - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Small Cap Value segment of the US equity market.

The fund is sponsored by Vanguard. It has amassed assets over $34.07 billion, making it the largest ETF attempting to match the Small Cap Value segment of the US equity market.

Why Small Cap Value

Sitting at a market capitalization below $2 billion, small cap companies tend to be high-potential stocks compared to its large and mid cap counterparts, but come with higher risk.

Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. Considering long-term performance, value stocks have outperformed growth stocks in almost all markets; however, they are more likely to underperform growth stocks in strong bull markets.

Costs

Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.

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 1.85%.

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 20.4% of the portfolio. Financials and Consumer Discretionary round out the top three.

Looking at individual holdings, Nrg Energy Inc (NRG) accounts for about 0.74% of total assets, followed by Emcor Group Inc (EME) and Atmos Energy Corp (ATO).

Performance and Risk

VBR seeks to match the performance of the CRSP U.S. Small Cap Value Index before fees and expenses. The CRSP U.S. Small Cap Value Index measures the investment return of small-capitalization value stocks.

The ETF has gained about 5.8% so far this year and is up about 10.73% in the last one year (as of 01/28/2026). In the past 52-week period, it has traded between $162.76 and $227.03.

The ETF has a beta of 1.01 and standard deviation of 18.34% for the trailing three-year period, making it a medium risk choice in the space. With about 856 holdings, it effectively diversifies company-specific risk.

Alternatives

Vanguard Small-Cap Value 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, VBR is an excellent option for investors seeking exposure to the Style Box - Small Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.

The Schwab Fundamental U.S. Small Company ETF (FNDA) and the iShares Russell 2000 Value ETF (IWN) track a similar index. While Schwab Fundamental U.S. Small Company ETF has $9.60 billion in assets, iShares Russell 2000 Value ETF has $12.72 billion. FNDA has an expense ratio of 0.25% and IWN charges 0.24%.

Bottom-Line

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds 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.