1 Overlooked Vanguard ETF Is Outpacing the S&P 500 This Year at a Bargain Cost
2026-07-19 13:30
•Todd Shriber •The Motley Fool
•••• •• Axe Capital view
Small-Caps Outshine in US, But What About SA?
Vanguard’s small-cap growth ETF is beating the S&P 500, yet South African investors should tread carefully.
The Vanguard Small-Cap Growth ETF’s 21.4% return versus the S&P 500’s 9.5% is impressive, especially given its broad diversification and low fees. But for South African investors used to the JSE, small-cap exposure here feels riskier and less liquid. Our local stocks like Barloworld and Motus offer small-cap growth with a healthier dividend, yet don’t match the explosive US performance. Meanwhile, the rand’s recent weakness against the dollar (USD/ZAR) can erode returns from US assets when converted. That said, with global markets jittery around inflation and interest rates, the growth story for US small-caps could easily falter, hit by tightening liquidity and faster Fed hikes. On the JSE, financials like Standard Bank and FirstRand offer steadier footing amid uncertainty. For those set on growth, tread lightly on rand-hedged US small-caps and balance with local shares offering income and some growth cushion. this is just my opinion and not financial advice
I would watch VBK for signs of volatility and keep exposure modest due to rand risk but maintain or add to South African financials like Standard Bank and FirstRand for more stable growth. Consider trimming more volatile local small-caps for now.
- VBK
- USD/ZAR
- Standard Bank
- Sudden Fed rate hikes derailing US small-cap growth
- Rand depreciation magnifying FX losses on US investments
6/10
The Vanguard Small-Cap Growth ETF (VBK) is outperforming the S&P 500 with small-cap stocks up 21.4% year-to-date versus the S&P 500's 9.5% gains. The ETF holds 544 stocks with a low 0.05% expense ratio, making it an attractive option for risk-tolerant long-term investors seeking small-cap growth exposure without excessive volatility.
This article was originally published by The Motley Fool and has been adapted here for Axe Capital Trading News.
Publisher: The Motley Fool
Author: Todd Shriber
Categories: Technology, AI, Semiconductors, Equities
Tickers: VBK, NVDA
Sentiment: Positive - The ETF is highlighted as outpacing the S&P 500 with strong year-to-date returns of 21.4%, offers broad diversification with 544 holdings, has an exceptionally low expense ratio of 0.05%, and is recommended as an effective tool for long-term investors seeking small-cap growth exposure with mitigated risk. Nvidia is mentioned only as a reference point to illustrate analyst coverage disparity (61 analysts track Nvidia versus many small-cap stocks with no coverage). No performance assessment or investment recommendation is provided.
Keywords: small-cap growth, ETF performance, S&P 500, expense ratio, portfolio diversification, long-term investing
Insights:
- VBK: Positive: The ETF is highlighted as outpacing the S&P 500 with strong year-to-date returns of 21.4%, offers broad diversification with 544 holdings, has an exceptionally low expense ratio of 0.05%, and is recommended as an effective tool for long-term investors seeking small-cap growth exposure with mitigated risk.
- NVDA: Neutral: Nvidia is mentioned only as a reference point to illustrate analyst coverage disparity (61 analysts track Nvidia versus many small-cap stocks with no coverage). No performance assessment or investment recommendation is provided.