Which Small-Cap Growth ETF Is Better, Vanguard's VBK or the iShares IWO?

The iShares Russell 2000 Growth ETF (NYSEMKT:IWO) offers a broader portfolio and slightly higher recent returns, while the Vanguard Morningstar Small-Cap Growth ETF (NYSEMKT:VBK) features a significantly lower expense ratio.

Both funds target the aggressive growth segment of the small-cap market but track different indexes. While the iShares fund follows the well-known Russell 2000 Growth Index, the Vanguard fund utilizes a Morningstar-branded index. Investors often choose between these to capture the upside of emerging companies while managing specific sector tilts.

Snapshot (cost & size)

Metric	VBK	IWO
Issuer	Vanguard	iShares
Share price	$359.42 (as of 2026-08-10)	$388.02 (as of 2026-08-10)
Expense ratio	0.05%	0.24%
1-yr return (as of 2026-08-10)	29.5%	33.7%
Dividend yield	0.4%	0.4%
Beta	1.17	1.20
AUM	$47.0 billion	$14.9 billion

Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-year return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

The Vanguard fund is significantly more affordable, with an expense ratio of 0.05% compared to 0.24% for the iShares fund. Both ETFs offer an identical 0.4% trailing-12-month dividend yield as of the latest data.

Performance & risk comparison

Metric	VBK	IWO
Max drawdown (5 yr)	(38.4%)	(40.5%)
Growth of $1,000 over 5 years (total return)	$1,300	$1,331

What's inside

The iShares Russell 2000 Growth ETF’s top sector holdings are healthcare at 29%, technology at 21%, and industrials at 15%. Its holdings count stands at 1,106. Some of its positions include Moog Class A at 0.70%, Glaukos at 0.63%, and Brightspring Health Services at 0.62%. It was launched in 2000. The iShares Russell 2000 Growth ETF has paid $1.64 per share over the trailing 12 months, which on its recent ~$388.02 share price works out to a 0.4% yield.

The Vanguard Morningstar Small-Cap Growth ETF leans toward technology at 27%, industrials at 23%, and healthcare at 18%. It maintains 579 holdings. Top holdings include Credo Technology Group at 1.24%, Revolution Medicines at 1.04%, and Astera Labs at 1.02%. It was launched in 2004. The Vanguard Morningstar Small-Cap Growth ETF has paid $1.53 per share over the trailing 12 months, which on its recent ~$359.42 share price works out to a 0.4% yield.

For more guidance on ETF investing, check out the full guide at this link.

Which looks like the better buy

Investing in small-cap growth stocks is a great way to round out a portfolio, particularly as many smaller companies are seeing spectacular sales expansion due to the rise of artificial intelligence. Both the iShares Russell 2000 Growth ETF (IWO) and Vanguard Morningstar Small-Cap Growth ETF (VBK) give you exposure to this exciting segment of the stock market. Deciding between the two come down to the factors that matter most to you.

VBK is ideal for cost-conscious investors who are holding for the long term, since its expense ratio is so much lower than IWO’s. Another benefit is that VBK’s AUM is larger, which provides greater liquidity and is a sign of tighter bid-ask spreads. This makes the fund a good choice for active traders.

IWO has delivered a stronger one-year return and higher growth over the past five years. However, its much bigger expense ratio is a key downside. The fund also experiences greater volatility as demonstrated by its larger beta and max drawdown. If you’re comfortable with IWO’s sharper drawdowns and price swings, then it has the potential to deliver a higher return than VBK.

Robert Izquierdo has positions in Astera Labs. The Motley Fool has positions in and recommends Moog and Vanguard Morningstar Small-Cap Growth ETF. The Motley Fool recommends Astera Labs. The Motley Fool has a disclosure policy.