VBR vs. ISCV: Which Small-Cap Value ETF Is the Better Buy for Investors? | The Motley Fool

Both the Vanguard Small-Cap Value ETF ( VBR +0.05%) and the iShares Morningstar Small-Cap Value ETF ( ISCV 0.13%) target U.S. small-cap value stocks, but they track different indexes and show subtle differences in sector allocations and holdings. VBR stands out for its massive assets under management and trading liquidity, while ISCV offers a marginally lower expense ratio and broader stock exposure. This matchup looks at cost, performance, risk, and portfolio makeup to help clarify which may appeal more to investors seeking diversified value in the small-cap space. Snapshot (cost & size) Metric ISCV VBR Issuer iShares Vanguard Expense ratio 0.06% 0.07% 1-yr return (as of Dec. 22, 2025) 10.72% 7.98% Dividend yield 1.89% 1.97% Beta (5Y monthly) 1.22 1.12 AUM $575 million $60 billion Beta measures price volatility relative to the S&P 500. The 1-yr return represents total return over the trailing 12 months. ISCV comes in slightly more affordable on fees with a lower expense ratio, but the difference is minimal. ISCV also edges out VBR on yield, though both funds offer similar payouts for income-focused investors. Performance & risk comparison Metric ISCV VBR Max drawdown (5 y) -25.34% -24.19% Growth of $1,000 over 5 years $1,513 $1,531 What's inside VBR tracks a broad mix of U.S. small-cap value stocks, with the largest sector allocations in industrials (19% of total assets), financial services (18%), and consumer cyclicals (13%). The fund holds 840 stocks, with top positions in NRG Energy , Sandisk , and EMCOR Group . Backed by over two decades of history and around $60 billion in assets under management, VBR’s scale supports robust liquidity and efficient trading. ISCV, meanwhile, holds nearly 1,100 stocks and leans more heavily toward financial services (21%), consumer cyclicals (16%), and industrials (13%). Its top holdings include Sandisk, Rocket Companies , and Annaly Capital Management . While it is much smaller in AUM, ISCV offers even broader diversification within the small-cap value segment. For more guidance on ETF investing, check out the full guide at this link . What this means for investors Investing in small-cap stocks can be a smart way to diversify your portfolio and gain exposure to stocks with impressive growth potential. Because smaller companies can be more volatile than their larger counterparts, investing in a small-cap ETF can help mitigate risk. Both VRB and ISCV are exclusively focused on small-cap value stocks, but they have slightly different strengths and weaknesses. ISCV is the more diversified of the two, with 256 more stocks than VRB. However, despite this diversification, it's experienced marginally higher levels of volatility over the past five years with a higher beta and slightly steeper max drawdown than VBR. While the difference is subtle, it's a factor to consider for investors concerned about risk. The two funds also differ in their top sectors, with ISCV focused more on financial services and VBR tilted toward industrials. For investors who have a preference when it comes to sector diversification, this could be a deciding factor. With similar fee...

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