Better Small-Cap Growth ETF: Vanguard's VBK vs. State Street's SLYG

Explore how differences in cost, holdings, and sector focus set these two small-cap growth ETFs apart for portfolio builders.The State Street SPDR S&P 600 Small Cap Growth ETF (SLYG +0.74%) and the Vanguard Small-Cap Growth ETF (VBK +1.06%) both target U.S. small-cap growth stocks, but VBK charges a lower fee, is far larger by assets under management, and shows a stronger recent performance record alongside higher volatility.Both SLYG and VBK are designed to capture the upside of U.S. small-cap growth companies, though they track different benchmarks and use distinct selection criteria.This comparison explores how their costs, returns, risk profiles, and portfolio tilts stack up for investors seeking exposure to fast-growing smaller firms.Snapshot (cost & size)MetricSLYGVBKIssuerSPDRVanguardExpense ratio0.15%0.07%1-yr return (as of Jan. 9, 2026)10.2%14.4%Dividend yield0.8%0.5%Beta1.181.43AUM$3.7 billion$39.7 billionBeta measures price volatility relative to the S&P 500; beta is calculated from five-year weekly returns. The 1-yr return represents total return over the trailing 12 months.VBK looks more affordable, charging less than half the expense ratio of SLYG, though SLYG offers a slightly higher dividend yield over the past year.Performance & risk comparisonMetricSLYGVBKMax drawdown (5 y)-29.18%-38.39%Growth of $1,000 over 5 years$1,210$1,145What's insideVBK tracks a broad basket of 579 U.S. small-cap growth stocks, with technology (27%), industrials (21%), and healthcare (18%) as its largest sector allocations. Its top holdings as of the latest data include Insmed Inc (INSM +3.35%), Comfort Systems USA Inc (FIX +4.13%), and SoFi Technologies Inc (SOFI 1.15%), each representing a little over 1% of the fund. The fund has a long track record of 22 years, and its sector allocation shows a pronounced tilt toward technology relative to its peer.SLYG, in contrast, covers 336 stocks and places slightly less weight on technology (19%), with industrials (18%), and healthcare (16%) close behind. Its largest positions include Arrowhead Pharmaceuticals In (ARWR 0.68%), Armstrong World Industries (AWI +2.44%), and Jbt Marel Corp (JBTM 2.21%).Both funds avoid leverage, currency hedges, or ESG overlays, so investors should expect straightforward exposure to small-cap growth factors. SLYG’s selection process emphasizes sales growth and momentum, while VBK’s approach results in broader diversification and a heavier tech exposure.AdvertisementFor more guidance on ETF investing, check out the full guide at this link.What this means for investorsBoth the State Street SPDR S&P 600 Small Cap Growth ETF (SLYG) and the Vanguard Small-Cap Growth ETF (VBK) provide good exposure to smaller growth companies, so choosing one to invest in comes down to a handful of key differences.Because VBK has a greater emphasis on technology stocks, it exhibits higher volatility. This can be seen in its bigger beta and max drawdown compared to SLYG. However, the fund sports a much lower expense ratio, which keeps more money in your pocket. Moreover, its far larger assets under management provide the fund with greater liquidity for investors.SLYG's smaller exposure to the tech industry contributed to its lower one-year return compared to VBK due to the sector's rapid growth from the rise of artificial intelligence. However, this means SLYG is not as exposed to the higher volatility inherent in the technology market. Moreover, stocks such as Arrowhead Pharmaceuticals have seen substantial gains over the past year, so SLYG can still deliver strong results without as much invested in tech companies.In choosing between these two ETFs, SLYG's major downsides are its smaller AUM and higher expense ratio. For investors who care about liquidity and cost, VBK would be the superior ETF. For those who want lower volatility, SLYG is the better choice.GlossaryETF: Exchange-traded fund that holds a basket of securities and trades like a stock.Expense ratio: Annual fund fee, expressed as a percentage of assets, deducted from returns.Assets under management (AUM): Total market value of all assets managed by a fund.Small-cap: Companies with relatively small stock market values, typically a few hundred million to several billion dollars.Growth stocks: Companies expected to grow earnings or revenue faster than the overall market.Benchmark: A standard index used to measure a fund’s performance and guide its holdings.Dividend yield: Annual dividends per share divided by share price, showing income return percentage.Total return: Investment gain including price changes plus dividends, assuming dividends are reinvested.Beta: Measure of a security’s volatility relative to the overall market, often the S&P 500.Max drawdown: Largest peak-to-trough decline in value over a specific period.Sector allocation: How a fund’s investments are distributed across different industries or sectors.Diversification: Spreading investments across many securities to reduce the impact of any single holding.Read NextJan 10, 2024 •By Parkev Tatevosian, CFA2 Top ETFs I'm Planning to Buy Hand Over Fist in 2024About the AuthorRobert "Izzy" Izquierdo is a contributing Motley Fool stock market analyst covering information technology, consumer discretionary, consumer staples, and communication services sectors. Prior to The Motley Fool, Izzy was head of product management at Target Media Partners, developing and launching multimillion-dollar software used by businesses such as Charter Communications. Prior to that, he worked at Yahoo! and startups on software products in connected TV, AI, consumer apps, and digital advertising. He holds a bachelor’s degree in English literature from UCLA and is certified in software product management.TMFWryWriteStocks MentionedVanguard Index Funds - Vanguard Small-Cap Growth ETFNYSEMKT: VBK$320.16 (+0.01%) $+3.36SPDR Series Trust - State Street SPDR S&P 600 Tm Small Cap Growth ETFNYSEMKT: SLYG$98.50 (+0.01%) $+0.72*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.Advertisement