Small-Cap ETFs: Seriously?

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Okay, so everyone’s chasing these small-cap ETFs. The Vanguard Small-Cap ETF (VB) and the State Street SPDR Portfolio S&P 600 Small Cap ETF (SPSM). Like, what’s the deal? They both promise access to…smaller companies. As if that’s a revolutionary concept. And the nuance! They’re acting like there’s a huge difference. It’s exhausting. I’ve been looking at the numbers, and frankly, it’s a whole mess of fractions of percentages. It’s enough to make you just buy a bond. A safe bond.

The Snapshot (Because Apparently We Need One)

Metric VB SPSM
Issuer Vanguard SPDR
Expense ratio 0.03% 0.03%
1-yr return (as of Feb. 12, 2026) 10.65% 10.28%
Dividend yield 1.27% 1.53%
AUM $169 billion $14 billion
Beta (5Y monthly) 1.23 1.19

So, they both cost the same. Same. And SPSM gives you a slightly bigger dividend? Okay, great. Like that’s going to change my life. It’s the principle of the thing! They’re dangling this tiny fraction of a percent in front of you like it’s some major breakthrough. And the AUM difference…$169 billion versus $14 billion? That’s just…unfair. One’s a behemoth, the other is…struggling. It’s like comparing a blue whale to a…a slightly larger dolphin.

Performance & Risk (As If We Can Predict Anything)

Metric VB SPSM
Max drawdown (5 y) -28.16% -27.95%
Growth of $1,000 over 5 years $1,260 $1,216

Look at those drawdowns! -28.16%? -27.95%? They’re practically the same! And they’re trying to tell me there’s a meaningful difference? It’s insulting. They’re just…rounding. And $1,260 versus $1,216 over five years? That’s like…a lunch. A nice lunch. I could get a decent sandwich for that difference.

What’s Inside (The Mystery Deepens)

SPSM tracks the S&P SmallCap 600. 600! That’s a lot of companies. And they’re boasting about their holdings: Solstice Advanced Materials, Advanced Energy Industries, Arrowhead Pharmaceuticals. Who are these people? And VB has 1,324 stocks! 1,324! It’s chaos. It’s just…too much. They’re throwing everything at the wall to see what sticks. Rocket Lab, Sandisk, Ciena… they’re just naming things now. It’s arbitrary. And the sectors? Industrials, technology, financial services… it’s all the same stuff, just shuffled around.

For more guidance on ETF investing, check out the full guide at this link. (Honestly, who has time for a “full guide”?)

What This Means (Or Doesn’t)

Investing in a small-cap ETF can be a smart way to diversify your portfolio. Or it can be a terrible idea. It’s really a coin flip, isn’t it? VB is more diversified, holding more than twice as many stocks. Great. More to go wrong. And it leans into technology? Of course it does. Because that’s what everyone does. Tech is the new black. It’s predictable. It’s…irritating.

VB marginally outperformed SPSM. Marginally! It’s a rounding error! The difference between these two is so small, it’s practically nonexistent. If you’re agonizing over this decision, you need a hobby. A serious hobby. Like stamp collecting. Or competitive bird watching. Anything to distract you from the meaningless minutiae of ETF selection.

Deciding between these two comes down to your investing goals? No, it comes down to luck. Pure, unadulterated luck. And maybe a slightly better algorithm. But honestly, it’s all a crapshoot.

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2026-02-13 00:24