Small-Cap Drift: VB & SCHA

by

The market, as one observes, is a system of infinite regressions. One attempts to categorize, to quantify, to understand—and finds only further layers of abstraction. This document concerns itself with two particular instruments—the Vanguard Small-Cap ETF (VB) and the Schwab U.S. Small-Cap ETF (SCHA)—a pairing not of equals, perhaps, but of near-identical echoes in a hall of mirrors. The purpose, ostensibly, is comparison. But one suspects the true function is merely to confirm the inherent unknowability of all things.

Both ETFs, one gathers, contain collections of smaller companies—entities struggling, as all entities do, against the relentless tide of time and market forces. They offer a diversified selection, a scattering of hopes and failures. But even within this apparent similarity, there are subtle deviations, fractional variances that seem, at first glance, inconsequential, yet hint at a deeper, more unsettling truth: nothing is ever truly the same.

A Snapshot of Proportions

Metric SCHA VB
Issuer Schwab Vanguard
Expense ratio 0.04% 0.05%
1-yr return (as of Jan. 20, 2026) 13.67% 9.36%
Dividend yield 1.26% 1.33%
AUM $19 billion $162 billion
Beta (5Y monthly) 1.33 1.27

SCHA presents a marginally lower cost, a fractional reprieve from the inevitable erosion of capital. VB offers a slightly elevated dividend yield, a fleeting promise of return. These differences, however, are so minor as to be practically nonexistent. One is left to wonder if the entire exercise is not a bureaucratic ritual, a meaningless accounting designed to obscure the underlying chaos.

Performance and the Illusion of Control

Metric SCHA VB
Max drawdown (5 y) -30.79% -28.16%
Growth of $1,000 over 5 years $1,249 $1,308

The numbers shift, fluctuate, dance before one’s eyes. SCHA experienced a deeper descent into loss, a more pronounced period of vulnerability. VB, conversely, demonstrated a slightly more robust recovery. Yet, these are merely historical artifacts, shadows of past events that offer no guarantee of future outcomes. To believe otherwise is to succumb to the comforting delusion of predictability.

The Contents: A Labyrinth of Holdings

VB encompasses 1,324 holdings, a vast and bewildering collection of entities. The largest concentrations reside within industrials (19%), technology (18%), and financial services (13%). Its top positions—Rocket Companies, Sandisk, and Ciena—each represent a negligible fraction of the total assets. This diversification, one supposes, is intended to mitigate risk, but it also creates a sense of profound detachment, a feeling that one is invested in nothing at all.

SCHA, by comparison, exhibits a slightly different distribution, with a greater emphasis on financial services (17%), technology (17%), and healthcare (16%). It holds a larger basket of 1,740 stocks, including Sandisk, Lumentum, and Rocket Companies. Again, each holding constitutes a minuscule portion of the overall portfolio, a testament to the relentless pursuit of statistical insignificance.

Neither fund employs leverage, currency hedging, or ESG screens. They remain, in essence, pure, unadulterated instruments of speculation, devoid of any moral or ethical considerations. This simplicity, one finds, is both unsettling and strangely comforting.

What This Signifies for the Observer

Both VB and SCHA offer a diversified exposure to the world of small-cap equities. Neither is significantly skewed toward any particular industry, although subtle variations exist in their sector allocations. An investor seeking greater exposure to industrials might favor VB, while one more inclined toward financial services and healthcare might opt for SCHA. But ultimately, the choice is arbitrary, a matter of personal preference in a universe governed by chance.

Historically, SCHA has exhibited a slightly higher degree of volatility, a greater propensity for erratic movements. It has outperformed VB over the past twelve months, but its total returns over the past five years have fallen slightly behind. These fluctuations, however, are merely temporary anomalies, meaningless deviations from the long-term trend of market uncertainty.

The expense ratios and dividend yields are largely comparable, offering little in the way of meaningful differentiation. The primary distinction lies in the assets under management (AUM). VB boasts a significantly larger AUM, which theoretically provides greater liquidity and facilitates larger trades without unduly influencing the price. But even this advantage is illusory, a fleeting moment of stability in a perpetually unstable system.

One is left with the inescapable conclusion that the entire exercise is a futile attempt to impose order on chaos, to find meaning in a meaningless universe. The market, like life itself, is a labyrinth of endless possibilities, a relentless cycle of hope and despair. And we, the investors, are merely hapless wanderers, forever lost in its intricate corridors.

Read More

2026-02-23 18:34