VBR vs. SLYV: Is Broader Small-Cap Value Exposure or a Focus on Profitable Companies the Better Choice for Investors?

Vanguard Small-Cap Value ETF (NYSEMKT:VBR) and State Street SPDR S&P 600 Small Cap Value ETF (NYSEMKT:SLYV) both focus on U.S. small-cap value stocks, but VBR offers lower costs and broader diversification, while SLYV has shown stronger recent returns and a more concentrated portfolio.

Both VBR and SLYV aim to capture the performance of U.S. small-cap value stocks using passive, index-based approaches. This comparison examines how these two funds differ in costs, portfolio composition, risk, and recent performance, providing context for which may better fit different investor preferences.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months.

VBR is more affordable with an expense ratio of 0.05%, compared to SLYV’s 0.15%. Both funds offer a matching dividend yield of 1.9%, making cost the main differentiator for long-term, fee-conscious investors.

Performance & risk comparison

What’s inside

SLYV tracks the S&P SmallCap 600 Value Index, focusing on stocks with strong value metrics such as book value to price and earnings to price. With 460 holdings, its largest sector exposures are Financial Services (20%), Consumer Cyclical (17%), and Industrials (14%). Top positions include Eastman Chemical Co (EMN 0.12%), Lkq Corp (LKQ 0.21%), and Jackson Financial Inc A (JXN 0.59%). SLYV has been available for more than 25 years, offering a relatively concentrated portfolio compared to broader peers.

VBR, by contrast, tracks the CRSP US Small Cap Value Index and holds 841 companies, making it more diversified. It is most heavily weighted toward Industrials (19%), Financial Services (18%), and Consumer Cyclical (13%). Its largest holdings are Sandisk Corp (SNDK +2.48%), EMCOR Group Inc (EME +2.05%), and NRG Energy Inc (NRG +1.36%). Neither fund introduces unusual quirks, and both take a straightforward approach to small-cap value.

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What this means for investors

Small-cap value investing covers a wide range of companies, from profitable businesses trading at modest valuations to firms facing operational or financial pressure. That variation is built into how indexes are constructed and helps explain the difference between the Vanguard Small-Cap Value ETF and the SPDR S&P 600 Small Cap Value ETF.

State street SPDR S&P 600 Small Cap Value ETF follows a more selective approach by tracking an index that requires companies to be profitable, which reduces exposure to businesses with weaker earnings profiles. This tends to tilt the portfolio toward more established small-cap companies and can help during periods when investors focus more closely on fundamentals. Vanguard Small-Cap Value ETF takes a broader approach, holding a much wider range of small-cap value stocks and capturing more of the category’s full opportunity set. That includes companies earlier in a recovery cycle, along with firms whose lower valuations may reflect greater uncertainty.

For investors, these differences stand out over a full market cycle. Broader small-cap value funds like VBR may do better during economic recoveries, when lower-quality or cyclical companies bounce back. More selective funds like SLYV might perform better when markets are cautious and profitability is more important. In the end, the choice depends on whether you want wider exposure to small-cap value stocks or prefer a portfolio focused on companies with steady earnings.