Schwab and Vanguard charge the same 0.03%. Their small-cap funds are 3.7 percentage points apart

Schwab's ASCHA returned 3.7 percentage points more than Vanguard's AVB this year. Both are funds of US small companies, and both charge 0.03%. Between these two, the index is the whole difference.

The index is the decision

State Street's ASPSM owns the S&P SmallCap 600, about 600 US small companies, weighted by size. S&P Dow Jones Indices will not add a company unless the latest quarter was profitable and the last four quarters, added together, were profitable too.

The Russell 2000 has no earnings test. Healthcare is 11% of ASPSM and 20% of iShares' Russell 2000 fund, AIWM, which holds about 2,000 US small companies.

86.6% of the S&P 600 names also sit in the Russell 2000. By count, those shared names are 26.6% of AIWM, and by the size of the positions, the overlap is 46.5%.

iShares' AIJR tracks the same S&P 600 index. The overlap by size of position is 96.5%, and AIJR charges 0.06%, which is $3 a year extra on $10,000. AIJR holds $103.8 billion, against $15.7 billion in ASPSM, and it trades more. That $3 is the price of the larger fund, not of different stocks.

Among 13 S&P SmallCap 600 funds, ASPSM ranks first and AIJR second. The fee is the largest part of that score, at 30%, and ASPSM charges half what AIJR charges.

ASCHA tracks the Dow Jones U.S. Small-Cap Total Stock Market Index and holds 1,755 companies. AVB tracks the CRSP US Small Cap Index, though the fund is now named for Morningstar, and holds 1,357.

Vanguard's Russell 2000 fund, AVTWO, charges 0.06%. On a $10,000 balance that does not change, the extra 0.13 percentage points in AIWM is $13 a year, or $130 over ten years.

AIWM trades about $6.4 billion of shares a day, about 35 times AVTWO. The difference you pay for is that trading, because both funds own the Russell 2000. A holder who is not trading in size does not need to pay it.

On our scoring of 17 US small-cap funds, a separate group from the S&P 600 funds, ASCHA ranks first and AVB ranks second. They tie on the fee, which is 30% of the score, and ASCHA also ties AIWM for first on how easily the shares trade. The trade-off is how the fund behaved when markets fell: ASCHA ranks 11th of 17, and AVB ranks second.

AIWM ranks fifth of those 17, and AVTWO ranks third. AIWM ranks eighth on the fee, against fifth for AVTWO, and it ties for first on trading, which is 15% of the score.

The figures below are total return, with payouts reinvested, through Thursday, October 1. A strong year is not a reason to prefer one index.

Funds that own the same index returned almost the same amount. ASCHA and AVB did not, even at the same fee. The past year shows the same split.

Paying someone to pick

Fidelity's AFESM uses a set of rules to try to beat a small-cap benchmark, and it charges 0.28%. Avantis's AAVSC picks US small companies by price and profits, rather than holding every name in an index, and it charges 0.25%. On $10,000, that is $25 a year above the 0.03% funds for AFESM, and $22 for AAVSC.

This year AFESM returned 20.5%, which is 5.6 percentage points more than the S&P 600 funds, and AAVSC returned 19.5%. Over the past year the figures are 24.8% and 22.8%.

S&P Dow Jones Indices found that 69% of actively managed small-cap funds lagged the S&P SmallCap 600 in the first half of 2026. Over the 15 years through June 2026, 91% did. A good year for these two is not what the group has done.

The cheaper fund, AAVSC, has only run since January 2022 and holds $3.0 billion, while AFESM has run since 2007 with $6.5 billion. Pay the higher fee only if the picking is what you wanted.

That gap of 3.7 percentage points is the difference between two indexes at the same fee. Once the index is the same, take the cheaper fund, unless you need the trading in AIWM.