Is Vanguard's VB or SPDR's SPSM the Better Small-Cap ETF Buy? Here's What Investors Need to Know.

Core Insights - The Vanguard Small-Cap ETF (VB) and the State Street SPDR Portfolio S&P 600 Small Cap ETF (SPSM) are both low-cost options for investors interested in U.S. small-cap stocks, but they differ in portfolio composition and performance nuances [1] Cost & Size - Both VB and SPSM have an expense ratio of 0.03% [2][3] - As of February 12, 2026, VB has a 1-year return of 10.65% compared to SPSM's 10.28% [2] - SPSM offers a higher dividend yield of 1.53% versus VB's 1.27% [2] - VB has significantly larger assets under management (AUM) at $169 billion compared to SPSM's $14 billion [2] Performance & Risk Comparison - Over the past five years, VB experienced a maximum drawdown of -28.16%, while SPSM had a slightly lower drawdown of -27.95% [4] - An investment of $1,000 in VB would have grown to $1,260 over five years, while the same investment in SPSM would have grown to $1,216 [4] Portfolio Composition - SPSM tracks the S&P SmallCap 600 Index and includes 607 stocks, with top sectors being financial services (17%), industrials (16%), and consumer cyclical (15%) [5] - VB holds a broader portfolio of 1,324 stocks, with a focus on industrials (19%), technology (17%), and financial services (13%) [6] Investment Implications - VB's greater diversification, with more than twice the number of stocks as SPSM, may help limit risk associated with small-cap stocks [7] - VB's heavier allocation to technology (17% vs. 13% for SPSM) may lead to higher volatility but also greater long-term returns [8] - Both funds have shown similar total returns over 12 months and five years, but VB has slightly outperformed SPSM in both periods [9]