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Should Vanguard SmallCap Growth ETF (VBK) Be on Your Investing Radar?
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If you're interested in broad exposure to the Small Cap Growth segment of the US equity market, look no further than the Vanguard SmallCap Growth ETF (VBK - Free Report) , a passively managed exchange traded fund launched on 01/26/2004.
The fund is sponsored by Vanguard. It has amassed assets over $12.12 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.
Growth stocks have higher than average sales and earnings growth rates. While these are expected to grow faster than the broader market, they also have higher valuations. Also, growth stocks are a type of equity that carries more risk compared to others. Even though growth stocks are more likely to outperform their value counterparts in strong bull markets, value stocks have a record of delivering better returns in almost all markets than growth stocks.
Costs
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain 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 0.54%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, 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 23.70% of the portfolio. Healthcare and Industrials round out the top three.
Looking at individual holdings, Slcmt1142 accounts for about 2.45% of total assets, followed by Entegris Inc. (ENTG - Free Report) and Bio-Techne Corp. (TECH - Free Report) .
Performance and Risk
VBK seeks to match the performance of the CRSP U.S. Small Cap Growth Index before fees and expenses. The CRSP U.S. Small Cap Growth Index measures the investment return of small-capitalization growth stocks.
The ETF has added roughly 1.48% so far this year and is down about -23.66% in the last one year (as of 01/09/2023). In the past 52-week period, it has traded between $188.16 and $267.09.
The ETF has a beta of 1.11 and standard deviation of 30.88% for the trailing three-year period, making it a medium risk choice in the space. With about 712 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard SmallCap 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, VBK is a reasonable 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 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 $5.25 billion in assets, iShares Russell 2000 Growth ETF has $9.71 billion. IJT has an expense ratio of 0.18% and IWO charges 0.23%.
Bottom-Line
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are 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?
If you're interested in broad exposure to the Small Cap Growth segment of the US equity market, look no further than the Vanguard SmallCap Growth ETF (VBK - Free Report) , a passively managed exchange traded fund launched on 01/26/2004.
The fund is sponsored by Vanguard. It has amassed assets over $12.12 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.
Growth stocks have higher than average sales and earnings growth rates. While these are expected to grow faster than the broader market, they also have higher valuations. Also, growth stocks are a type of equity that carries more risk compared to others. Even though growth stocks are more likely to outperform their value counterparts in strong bull markets, value stocks have a record of delivering better returns in almost all markets than growth stocks.
Costs
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain 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 0.54%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, 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 23.70% of the portfolio. Healthcare and Industrials round out the top three.
Looking at individual holdings, Slcmt1142 accounts for about 2.45% of total assets, followed by Entegris Inc. (ENTG - Free Report) and Bio-Techne Corp. (TECH - Free Report) .
Performance and Risk
VBK seeks to match the performance of the CRSP U.S. Small Cap Growth Index before fees and expenses. The CRSP U.S. Small Cap Growth Index measures the investment return of small-capitalization growth stocks.
The ETF has added roughly 1.48% so far this year and is down about -23.66% in the last one year (as of 01/09/2023). In the past 52-week period, it has traded between $188.16 and $267.09.
The ETF has a beta of 1.11 and standard deviation of 30.88% for the trailing three-year period, making it a medium risk choice in the space. With about 712 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard SmallCap 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, VBK is a reasonable 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 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 $5.25 billion in assets, iShares Russell 2000 Growth ETF has $9.71 billion. IJT has an expense ratio of 0.18% and IWO charges 0.23%.
Bottom-Line
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are 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.