4-Star ETFs Poised to Pop: Vanguard Small-Cap

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, the Vanguard Small-Cap ETF (NYS: VB) has earned a respected four-star ranking.

With that in mind, let's take a closer look at Vanguard Small-Cap and see what CAPS investors are saying about the ETF right now.

Vanguard Small-Cap facts


January 2004

Total Assets

$4 billion

Investment Approach

Seeks to track the performance of the MSCI US Small Cap 1750, a broadly diversified index of stocks of smaller U.S. companies.

Expense Ratio


Dividend Yield


1-Year/ 3-Year / 5-Year Annualized Returns

11.5% / 21.4% / 3.1%

Top Holdings with High CAPS Rating (4 or 5 Stars) and Portfolio Weight

American Capital Agency (NAS: AGNC) (0.29%)

BE Aerospace (NAS: BEAV) (0.24%)

Panera Bread (NAS: PNRA) (0.22%)


iShares Russell 2000 Index (NYS: IWM)

iShares S&P Small-Cap 600 Index (NYS: IJR)

Sources: Morningstar and Motley Fool CAPS.

On CAPS, 90.5% of the 147 members who have rated Vanguard Small-Cap believe the ETF will outperform the S&P 500 going forward. These bulls include Zen1212 and acegdl007.

Last year, Zen1212 succinctly summed up the investment case: "If you're looking for a way to get into small caps but are concerned about the risks and volatility of small cap stocks, this is a good way to diversify a portfolio and spread the risk out."

Vanguard Small-Cap, in particular, sports a low expense ratio of just 0.17%. That's cheaper than that of other small-cap ETF plays like iShares Russell 2000 (0.26%) and iShares S&P Small-Cap 600 (0.20%).

CAPS member acegdl007 expands on the outperform argument:

Vanguard started offering this about 6 years ago as an ETF version of its Small Cap mutual fund. ... Vanguard has a great reputation for offering attractive funds and ETF's with some of the lowest management costs and fees. This is a great ETF/fund to include in a 401k portfolio that will add a comfortable dose of risk with potential for good growth in the long term.

What do you think about Vanguard Small-Cap, or any other ETF for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional ETFs is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!

Interested in another easy way to track Vanguard Small-Cap?Add it to your watchlist.

At the time thisarticle was published Fool contributorBrian Pacamparaowns no position in any of the companies mentioned.Motley Fool newsletter serviceshave recommended buying shares of Panera. Try any of our Foolish newsletter servicesfree for 30 days.We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Fool'sdisclosure policyalways gets a perfect score.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.