VBR vs. IWN: Does Vanguard's Low Fee Beat iShares' Broader Diversification? | The Motley Fool

The Vanguard Small-Cap Value ETF ( VBR +0.05%) stands out for its lower cost and higher yield, while the iShares Russell 2000 Value ETF ( IWN 0.34%) offers broader diversification and a stronger recent return, with each fund tilting toward different sectors. Both VBR and IWN are popular choices for investors seeking exposure to U.S. small-cap value stocks, but they track different indexes and emphasize distinct sector mixes. This comparison looks at cost, yield, performance, portfolio makeup, and risk to help clarify which ETF may appeal more to different types of small-cap value investors. Snapshot (cost & size) Metric VBR IWN Issuer Vanguard iShares Expense ratio 0.07% 0.24% 1-yr return (as of Dec. 23, 2025) 8.22% 12.77% Dividend yield 2.0% 1.6% AUM $59.6 billion $11.8 billion Beta measures price volatility relative to the S&P 500; beta is calculated from five-year weekly returns. The 1-yr return represents total return over the trailing 12 months. VBR looks more affordable for long-term holders with a 0.07% expense ratio compared to IWN’s 0.24%, and it also pays a slightly higher dividend yield at 2.0% versus 1.6%. Performance & risk comparison Metric VBR IWN Max drawdown (5 y) -24.19% -26.71% Growth of $1,000 over 5 years $1,502 $1,396 What's inside IWN tracks an index of small-cap U.S. stocks that display value characteristics and includes 1,423 holdings, making it broader than many peers. Financial Services dominate at 26%, followed by Industrials at 13%, and Health Care at 11%. The largest positions -- Echostar Corp Class A ( SATS 1.26%), Hecla Mining ( HL +1.87%), and UMB Financial ( UMBF +0.00%)-- each account for less than 1.1% of assets, so no single stock heavily influences returns. The fund has a long track record, with over 25 years since inception. VBR also aims for small-cap value exposure but takes a slightly different approach, with Industrials (22%), Financial Services (20%), and Consumer Discretionary (14%) as its top sectors. Its largest holdings -- NRG Energy ( NRG +0.20%), Sandisk ( SNDK 0.01%), and Emcor ( EME +0.16%) -- each make up less than 1% of assets. VBR holds 840 stocks, so it is somewhat less diversified than IWN, but it still spreads risk broadly across the small value universe. For more guidance on ETF investing, check out the full guide at this link . What this means for investors When it comes to these value ETFs, Vanguard charges roughly one-third the price of iShares for essentially the same investment strategy, giving it a clear advantage here. VBR dominates on cost and scale, charging just 0.07% annually compared to IWN's 0.24% expense ratio. VBR also commands nearly $60 billion in assets versus IWN's $12 billion, and offers a slightly higher dividend yield at 2.0% compared to IWN's 1.6%. However, with 1,415 holdings, IWN offers significantly broader diversification than VBR's portfolio, spreading risk across more companies. IWN also tracks the widely-recognized Russell 2000 Value Index, which some investors prefer for its transparency and third-party methodology. Both funds have delivered similar long-term performance,...

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