5-Star ETFs Poised to Pop: Vanguard Small-Cap Growth

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 Growth ETF (ASE: VBK) has earned a coveted five-star ranking.

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

Vanguard Small-Cap Growth facts

InceptionJanuary 2004
Total Assets$1.88 billion
Investment ApproachSeeks to track the performance of the MSCI US Small Cap Growth Index, a broadly diversified index of growth stocks of smaller U.S. companies.
Expense Ratio0.12%
1-Year / 3-Year / 5-Year Annual Returns8.6% / 26.1% / 4.1%
Major Holdings With High CAPS Interest (at least 1,000 Active Picks) and Portfolio Weight

Level 3 Communications (NYS: LVLT) (0.4%)

Panera Bread (NAS: PNRA) (0.4%)

JDS Uniphase (NAS: JDSU) (0.4%)

Dividend Yield0.5%

iShares Russell 2000 Growth (ASE: IWO)

iShares S&P SmallCap 600 Growth (ASE: IJT)

Sources: Morningstar and Motley Fool CAPS.

On CAPS, 92% of the 96 members who have rated Vanguard Small-Cap Growth believe the ETF will outperform the S&P 500 going forward. These bulls include Ludraman1 and divinezone.

Having gotten on board a few years ago, Ludraman1 nicely summed up the bull case: "[Small-cap] growth ETFs; always good for a few pleasant surprises that bring your returns up."

Vanguard Small-Cap Growth, in particular, sports a cheap expense ratio of 0.12%. That's lower than that of other small-cap growth ETFs like iShares Russell 2000 Growth (0.25%) and iShares S&P SmallCap 600 Growth (0.25%).  

CAPS member divinezone expands on the ETF as a rather timely pick, as well:

I have a hunch that this fund will outperform the market over the next 2 or 3 months especially, due to the famous "January effect" -- where small cap stocks outperform larger caps in January as the stock market rises (usually chalked up to security sales in December and repurchases in January, for tax reasons). Beyond that time frame the rationale behind the bullish view is simply that over long periods of time, small-caps outperform large-caps.

What do you think about Vanguard Small-Cap Growth, 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 Growth?Add it to your watchlist.

At the time this article was published Fool contributorBrian Pacamparaowns no position in any of the companies mentioned. The Motley Fool owns shares of Panera.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.

Read Full Story

Can't get enough business news?

Sign up for Finance Report by AOL and get everything from retailer news to the latest IPOs delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.