Investors weighing small-cap ETF options face a meaningful choice between two funds that differ sharply in cost, diversification, and portfolio construction.
The Vanguard Small-Cap ETF (NYSEMKT: VB) carries an expense ratio of just 0.03%, making it significantly cheaper than the JPMorgan BetaBuilders U.S. Small Cap Equity ETF (CBOE: BBSC), which charges 0.09%.
VB also offers a higher trailing-12-month distribution yield of 1.2%, compared to 1.0% for BBSC, giving income-focused investors a modest but notable edge with the Vanguard product.
Over the past 12 months through June 3, 2026, BBSC delivered a total return of 36.0%, outpacing VB’s 28.8% return over the same period.
However, when measured over a longer horizon, VB pulls ahead, with a $1,000 investment five years ago growing to $1,410 in total return, versus $1,379 for BBSC over the same window.
VB also demonstrated stronger risk-adjusted performance, recording a maximum five-year drawdown of 28.2%, compared to the steeper 30.9% drawdown experienced by BBSC.
The two funds also diverge considerably in portfolio breadth, with VB holding 1,357 positions versus the more concentrated 782 holdings inside BBSC.
VB’s largest sector weights are industrials at 21%, technology at 17%, and financial services at 13%, with top holdings including EMCOR Group Inc (NYSE: EME), Bloom Energy Corp (NYSE: BE), and Ciena Corp (NYSE: CIEN).
BBSC concentrates its exposure in technology at 18%, financial services at 17%, and healthcare at 16%, with top positions in TTM Technologies Inc (NASDAQ: TTMI), Semtech Corp (NASDAQ: SMTC), and SiTime Corp (NASDAQ: SITM).
The two funds also differ in their definition of small-cap, with BBSC targeting the 95th to 99th percentiles of market capitalization and excluding microcap stocks, while VB casts a wider net across the small-cap universe.
Small-cap stocks broadly have attracted growing investor interest, with the Russell 2000 returning approximately 17% year-to-date and 40% over the past 12 months, outperforming the S&P 500.
VB’s assets under management stand at $177.4 billion, dwarfing BBSC’s $692.7 million and reflecting the Vanguard fund’s longer track record since its 2004 launch, compared to BBSC’s 2020 debut.
Both funds represent solid vehicles for small-cap exposure, but VB’s combination of a rock-bottom expense ratio, broader diversification, and stronger five-year returns gives it a clear overall advantage for most long-term investors.
