---
title: "Hold VB over IWM for a small-cap stake"
url: "https://etf.net/news/vb-over-iwm-for-small-caps-2026-10-30"
published_at: "2026-10-30T15:44:55.837Z"
updated_at: "2026-10-30T15:44:55.837Z"
byline: "ETF.net Research"
---

# Hold VB over IWM for a small-cap stake

VB charges 0.03% a year against IWM's 0.19%, and a holder who wants the Russell 2000 can own that index for 0.06%.

By ETF.net Research. Published Oct 30, 2026.

Hold Vanguard Morningstar Small-Cap ETF VB, the fund long called Vanguard Small-Cap ETF, if you want U.S. small caps and plan to keep them. It charges **0.03%** a year. iShares Russell 2000 ETF IWM charges **0.19%**.

On $100,000, the extra fee is $160 a year. The first question is which small companies you want, and the two indexes do not give the same answer.

## Which small companies

IWM tracks the Russell 2000, the small-cap piece of the Russell family. At [FTSE Russell’s April 30, 2026 ranking](https://www.lseg.com/en/ftse-russell/russell-reconstitution), that index held 1,996 companies, from $146.4 million of market value to $5.7 billion. The middle company on that list was worth $1.1 billion.

VB tracks the Morningstar US Small Cap Index and holds the stocks in roughly the index’s weights. Until July 29, 2026, the index was the US Small Cap Index from the Center for Research in Security Prices, or CRSP. Morningstar bought that business, Vanguard renamed the fund and the index, and [said the objective, strategies and policies were unchanged](https://advisors.vanguard.com/assets/corp/fund_communications/pdf_publish/us-products/prospectuses/i864.pdf).

On Sept. 30, 2026, [Vanguard classed 61% of VB as small and 33.1% as medium/small](https://advisors.vanguard.com/investments/products/vb/vanguard-morningstar-small-cap-etf). [The fund’s median market cap was $10.7 billion](https://fund-docs.vanguard.com/F0969.pdf).

[Vanguard weights that median](https://workplace.vanguard.com/investments/product-details/fund/0969) by how much of the fund sits in each company, so half the assets were in companies larger than $10.7 billion and half in smaller ones. Russell’s $1.1 billion is a different figure, the middle company on the April 30 list.

24.8% of VB’s weight is in companies IWM also owns. Those same companies are 69.6% of IWM, because VB holds them more lightly. Across the shared names, VB’s weight is a median 0.36 times IWM’s weight in the same company.

Most of VB is companies IWM does not own. The rest of IWM is companies VB skips, further down the Russell list.

In the latest holdings, Natera is VB’s largest position, at 0.7% of the fund, and IWM does not own it.

From Sept. 1, 2021 through the Oct. 29, 2026 close, IWM was also the rougher holding. IWM’s price volatility was 22.2% a year, against 20.5% for VB, and its deepest decline was 33.1%, against 28.8%. Dividends are left out of both figures.

## The return gap is the index

Through Sept. 30, 2026, the Russell 2000 had the better record over one and three years. VB’s index had the better one over five and ten. These are annualized total returns of net asset value, from [Vanguard](https://fund-docs.vanguard.com/F0969.pdf) and [iShares](https://www.ishares.com/us/literature/fact-sheet/iwm-ishares-russell-2000-etf-fund-fact-sheet-en-us.pdf).

Table: , VB, IWM

The latest year was 2.65 percentage points in IWM’s favor, and neither fund produced that gap. IWM sat 0.14 percentage points behind the Russell 2000. VB sat 0.03 percentage points ahead of its own index.

Over ten years, VB led by 0.67 percentage points a year, after fees. The fee gap is 0.16 percentage points every year, whichever index is ahead. The latest year’s gap, 2.65 percentage points, was far larger than that fee, and the fee is the part you can know before you buy.

## When you want the Russell 2000

The 0.19% is the price of IWM, not the price of the Russell 2000. Vanguard Russell 2000 ETF VTWO charges **0.06%**, per its June 30, 2026 fee filing, to track the same index.

What separates IWM from VTWO is the trading. Over the 20 sessions through Oct. 29, 2026, IWM changed hands at about $6.9 billion a day, against about $158 million for VB and about $178 million for VTWO.

Chart: IWM turns over **$6.9 billion** a day

A stake you plan to keep does not need IWM’s market. On Oct. 29, 2026, VB closed 7 cents above the value of its holdings and IWM closed 13 cents below.

Hold VB if you want a small-cap stake and you will keep it. If the Russell 2000 is the index you want and you will hold it, buy VTWO. Buy IWM if you want that index and you may need to trade it.

Source: etf.net, https://etf.net/news/vb-over-iwm-for-small-caps-2026-10-30. Please cite the page URL.