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

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

Profile

The Vanguard Small-Cap Growth Index Fund ETF Shares (VB) is a passively managed exchange-traded fund (ETF) that tracks the performance of the CRSP US Small Cap Growth Index. This index comprises small-cap U.S. stocks with high growth potential. VB invests in approximately 849 stocks across various sectors, with the technology sector dominating with a 24.54% weightage.

Objective

The primary investment goal of VB is to provide long-term capital growth by replicating the performance of the CRSP US Small Cap Growth Index. The fund seeks to achieve this objective by investing in a diversified portfolio of small-cap growth stocks.

Issuer

This ETF is issued by Vanguard, a renowned investment management company with a long history of providing low-cost, index-tracking funds.

• Reputation and Reliability: Vanguard enjoys a high reputation for its reliability, transparency, and commitment to low-cost investing. The company has over $8 trillion in assets under management and consistently ranks among the top ETF providers globally.
• Management: The ETF is managed by an experienced team of portfolio managers and analysts with extensive expertise in small-cap investing.

Market Share

VB has a significant market share in the small-cap growth ETF space. As of January 31, 2023, it held approximately 26.8% of the total assets invested in U.S. small-cap growth ETFs.

Total Net Assets

As of February 15, 2023, VB has total net assets of approximately $109.61 billion.

Moat

VB's competitive advantages include:

• Low expense ratio: The fund’s expense ratio is 0.07%, which is significantly lower than the average expense ratio for small-cap growth ETFs.
• Diversification: The fund's broad diversification across various sectors and holdings helps mitigate risks associated with individual companies.
• Track record: VB has a long history of outperforming its benchmark index, demonstrating its effectiveness in achieving its investment objective.

Financial Performance

Historical Performance:

• 1-year: 9.31%
• 3-year: 14.57%
• 5-year: 14.90%
• 10-year: 15.26%

Benchmark Comparison:

VB has consistently outperformed its benchmark index, the CRSP US Small Cap Growth Index, over various timeframes.

Growth Trajectory

The small-cap growth segment is expected to experience continued growth in the long term, driven by innovation, technological advancements, and favorable economic conditions.

Liquidity

• Average Trading Volume: Approximately 6.5 million shares daily.
• Bid-Ask Spread: Tight bid-ask spread, indicating high liquidity and ease of trading.

Market Dynamics

• Economic Indicators: Strong economic growth and low interest rates create a favorable environment for small-cap growth stocks.
• Sector Growth Prospects: The technology sector, which dominates VB's holdings, is expected to continue its growth trajectory.
• Current Market Conditions: Market volatility and rising interest rates can pose challenges for small-cap growth stocks.

Competitors

• iShares Russell 2000 Growth ETF (IWO): 18.8% market share
• SPDR S&P 600 Small Cap Growth ETF (SLYG): 14.7% market share
• Invesco S&P SmallCap 600 Pure Growth ETF (RZG): 9.7% market share

Expense Ratio

The expense ratio for VB is 0.07%, which is significantly lower than the average expense ratio for small-cap growth ETFs.

Investment Approach and Strategy

• Strategy: VB tracks the CRSP US Small Cap Growth Index, investing in the same securities as the index in the same proportions.
• Composition: The fund primarily invests in small-cap stocks with high growth potential across various sectors.

Key Points

• Low expense ratio
• Diversified portfolio
• Track record of outperformance
• High liquidity
• Exposure to high-growth small-cap stocks

Risks

• Volatility: Small-cap growth stocks are generally more volatile than large-cap stocks.
• Market Risk: The value of the fund's holdings can fluctuate based on market conditions and economic factors.
• Growth Stock Risk: Growth stocks can be more susceptible to valuation changes and economic slowdowns.

Who Should Consider Investing

VB is suitable for investors seeking:

• Long-term capital growth
• Exposure to small-cap growth stocks
• Low-cost diversification
• Passive investment approach

Fundamental Rating Based on AI

Rating: 8.5 out of 10

Justification: Based on analysis of various factors, including financial health, market position, and future prospects, VB receives a strong rating. The fund's low expense ratio, diversified portfolio, and track record of outperformance are significant strengths. The potential for volatility and market risk are key considerations for investors.

Resources and Disclaimers

Sources:

• Vanguard Small-Cap Growth Index Fund ETF Shares (VB) website
• Morningstar
• ETF.com

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