Vanguard Small-Cap Growth Index Fund ETF Shares (VBK)

ETF Vanguard Small-Cap Growth Index Fund ETF Shares (VB)

Profile

The ETF Vanguard Small-Cap Growth Index Fund ETF Shares (VB) tracks the performance of the CRSP US Small Cap Growth Index. This index consists of stocks of small U.S. companies that are expected to demonstrate above-average growth potential. VB invests in over 1,000 stocks across various industries, offering broad exposure to the small-cap growth market.

Objective

The primary investment goal of VB is to provide long-term capital appreciation by replicating the performance of the CRSP US Small Cap Growth Index. This makes it ideal for investors seeking growth exposure in smaller companies with high-growth potential.

Issuer

Vanguard:

• Reputation and Reliability: Vanguard is one of the world's largest and most respected investment management firms, known for its low-cost and diversified investment products. They have a strong track record and positive reputation within the financial industry.
• Management: Vanguard employs experienced portfolio managers and analysts who oversee the ETF's composition and performance.

Market Share

VB is one of the largest small-cap growth ETFs, with a market share of roughly 15% in this segment.

Total Net Assets

As of October 26, 2023, VB has over $42 billion in total net assets.

Moat

• Low Cost: VB's expense ratio of 0.07% is among the lowest in the small-cap growth ETF category, offering investors a cost-effective way to access this market segment.
• Diversification: With over 1,000 holdings, VB offers significant diversification across industries and minimizes individual company risk.
• Track Record: VB has historically outperformed the broader market and its benchmark index over the long term.

Financial Performance

Historical Returns:

• 1 Year: +12.3%
• 3 Years: +15.5%
• 5 Years: +18.7%
• 10 Years: +14.2%

Benchmark Comparison: VB has consistently outperformed the CRSP US Small Cap Growth Index and the Russell 2000 Growth Index over various timeframes.

Growth Trajectory: The small-cap growth sector is expected to continue experiencing long-term growth, driven by innovation, technological advancements, and economic expansion.

Liquidity

Average Trading Volume: Over 15 million shares traded daily, ensuring high liquidity and ease of buying and selling. Bid-Ask Spread: The bid-ask spread is typically very tight, minimizing transaction costs.

Market Dynamics

The small-cap growth sector is influenced by various factors:

• Economic Indicators: Strong economic growth and low interest rates tend to benefit small-cap companies with high growth potential.
• Technology Innovation: Breakthroughs in technology can drive significant growth in specific sectors within the small-cap space.
• Market Sentiment: Investor confidence and risk appetite significantly impact the performance of growth-oriented assets.

Competitors

• iShares Russell 2000 Growth ETF (IWO) - 13% market share
• Invesco S&P SmallCap 600 Growth ETF (RZG) - 3% market share
• SPDR S&P 600 Small Cap Growth ETF (SLYG) - 2% market share

Expense Ratio

VB's expense ratio is 0.07%, making it one of the most cost-effective options in the small-cap growth ETF category.

Investment Approach and Strategy

• Strategy: VB passively tracks the CRSP US Small Cap Growth Index, aiming to replicate its performance.
• Composition: The ETF primarily invests in stocks of small U.S. companies with high growth potential across various industries.

Key Points

• Low-cost and tax-efficient way to access the small-cap growth market.
• Diversified portfolio with over 1,000 holdings.
• Proven track record of outperforming the broader market and its benchmark index.
• High liquidity and tight bid-ask spread.

Risks

• Volatility: Small-cap stocks are generally more volatile than large-cap stocks, potentially leading to larger price fluctuations.
• Market Risk: The overall market performance and economic conditions can significantly impact the ETF's value.
• Sector Risk: The small-cap growth sector is sensitive to specific economic and technological factors that can influence its performance.

Who Should Consider Investing

VB is suitable for investors seeking:

• Long-term capital appreciation
• Exposure to the small-cap growth market
• Cost-effective and diversified investment option
• Tolerance for higher volatility

Fundamental Rating Based on AI

7.5/10

VB's low cost, strong track record, and market-leading position make it a compelling investment option. However, its dependence on the small-cap growth sector's performance and inherent volatility are essential considerations for potential investors.

Resources and Disclaimers

• Vanguard Website: https://investor.vanguard.com/etf/profile/VB
• CRSP US Small Cap Growth Index: https://www.crspindices.com/indices/equity/crsp-us-small-cap-growth-index

Disclaimer: This analysis is provided for informational purposes only and should not be considered investment advice. Please consult a professional financial advisor before making any investment decisions.