Vanguard Small-Cap Value ETF Outshines State Street on Fees But is It the Better Buy?
2026-07-23 16:23
•Dave Kovaleski •The Motley Fool
•••• •• Axe Capital view
Small-Cap Value ETFs: Low Fees Aren't Everything
State Street’s SLYV beats Vanguard’s VBR on recent returns despite higher fees.
The Vanguard Small-Cap Value ETF (VBR) deserves credit for its impressively low fee of 0.05% and broad exposure to 840 companies, providing solid long-term returns near 10% annually. But looking at short-term performance, State Street’s SPDR S&P 600 Small Cap Value ETF (SLYV) outshines Vanguard with 20.4% year-to-date and 40.1% over 12 months. SLYV’s stricter earnings filter likely weeds out weaker businesses, which could explain its stronger showing in the recent cycle. In South Africa, small-cap value has less direct ETF representation but the lesson speaks to local banks and retailers where quality earnings matter. Expect the rand (USD/ZAR) to be sensitive if global risk appetite shifts and impacts emerging markets differently. If you chase past year returns without regard for fees and diversification, you risk buying into short-term momentum that won’t last. The better play might be a mix of both ETFs to balance cost and quality. this is just my opinion and not financial advice
I would tilt toward SLYV for now due to its earnings quality filter and leadership in recent returns but hold some VBR exposure to keep costs down and maintain diversification. Watch how the rand moves if US dollar strength persists, as that may pressure local sentiment.
- SLYV
- VBR
- USD/ZAR
- SLYV’s higher fee may erode gains if performance slows
- global growth slowdown could hit small-cap stocks hard, impacting USD/ZAR and local markets
6/10
Small-cap value stocks are outperforming major indexes year-to-date and over the past 12 months. The Vanguard Small-Cap Value ETF (VBR) offers lower fees (0.05%) but the State Street SPDR S&P 600 Small Cap Value ETF (SLYV) has delivered superior recent performance with 20.4% YTD returns versus 15.5% for Vanguard. The author recommends State Street's offering for its quality earnings screen and better recent performance, though both ETFs could be held together for diversification.
This article was originally published by The Motley Fool and has been adapted here for Axe Capital Trading News.
Publisher: The Motley Fool
Author: Dave Kovaleski
Categories: Rates, Equities, Earnings, Capital Returns
Tickers: VBR, SLYV
Sentiment: Positive - Praised for lowest expense ratio (0.05%), solid 5-year and 10-year annualized returns (~10%), and broad diversification with 840 holdings. However, recent performance lags competitors. Recommended as the better choice due to superior YTD (20.4%) and 12-month (40.1%) returns, quality screen ensuring portfolio companies have actual earnings, and slightly better dividend yield (1.81%). Higher expense ratio (0.15%) is offset by better performance.
Keywords: small-cap value stocks, ETF comparison, expense ratios, performance returns, portfolio diversification
Insights:
- VBR: Positive: Praised for lowest expense ratio (0.05%), solid 5-year and 10-year annualized returns (~10%), and broad diversification with 840 holdings. However, recent performance lags competitors.
- SLYV: Positive: Recommended as the better choice due to superior YTD (20.4%) and 12-month (40.1%) returns, quality screen ensuring portfolio companies have actual earnings, and slightly better dividend yield (1.81%). Higher expense ratio (0.15%) is offset by better performance.