vbk stock Vanguard Small‑Cap Growth ETF Guide

This guide explains vbk stock — Vanguard Small‑Cap Growth ETF (VBK): what it tracks, key facts (inception, expense ratio, holdings, AUM), performance and risks, trading/pricing mechanics, tax and m...

2024-07-11 01:28:00

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Vanguard Small‑Cap Growth ETF (VBK)

vbk stock is Vanguard’s exchange‑traded fund that provides broad exposure to U.S. small‑cap growth companies by tracking the CRSP US Small Cap Growth Index. The fund trades under the ticker VBK on NYSE Arca and is managed by Vanguard’s index equity group. This article explains VBK’s investment objective and strategy, fund facts, portfolio composition, index methodology, performance and risk characteristics, trading mechanics and tax considerations, fees and tracking, and how investors commonly use VBK in portfolios. You will also find comparisons with similar products and directions for further research. The content is neutral, fact‑focused, and suited for new and intermediate investors who want a thorough reference on vbk stock.

As of June 30, 2024, according to Vanguard, VBK provided exposure to hundreds of U.S. small‑cap growth names, and the fund’s public factsheets are the primary source for the most current statistics referenced below.

Investment objective and strategy

VBK’s stated objective is to track the performance of the CRSP US Small Cap Growth Index. The fund pursues this objective through a passive, index‑tracking approach that aims to replicate the index’s risk and return characteristics. Vanguard typically uses either full replication or representative sampling depending on market conditions and trading costs; for an index with many constituents such as the CRSP small‑cap growth universe, Vanguard may use sampling to achieve efficient tracking with low turnover and cost.

The CRSP growth methodology underlying vbk stock emphasizes growth characteristics when selecting and weighting holdings. Growth style is typically defined using measures such as historical and forecasted earnings growth, sales growth, and valuation metrics that favor companies with higher expected growth rates relative to peers. Holdings are weighted by market cap within the index rules, subject to CRSP’s small‑cap size definitions and style filters.

Key practical points about strategy for readers:

VBK is a U.S. equity growth fund focused on smaller companies; it is not a value or broad market small‑cap index.
Because it tracks a growth‑style small‑cap index, VBK will tend to overweight sectors and companies that exhibit higher growth metrics, which affects return volatility and drawdown behavior.
The fund is designed as a low‑cost, passive vehicle: its primary tool to capture small‑cap growth exposure is index replication and tight fee management.

Fund facts

Ticker: VBK
Exchange: NYSE Arca
Fund manager: Vanguard (Vanguard Equity Index Group / Vanguard Quantitative Equity Group)
Inception date: January 26, 2004
Typical expense ratio: 0.07% (expense ratios are subject to change; confirm current figure on Vanguard’s factsheet)
Number of holdings: approximately mid‑hundreds (holdings change with periodic reconstitutions; check the latest factsheet for an exact count as of a given date)
Assets under management (AUM): approximately US$10–12 billion (time‑stamped figures vary; see Vanguard’s official factsheet for the most recent AUM figure)
CUSIP: available in the fund prospectus and Vanguard documentation (investors should consult the latest prospectus for the exact CUSIP code)

As of June 30, 2024, Vanguard’s public materials indicated VBK held several hundred small‑cap growth names and carried a low expense ratio designed to keep tracking error minimal. Readers should treat AUM and holding counts as time‑sensitive facts and verify them in the fund’s current factsheet.

Holdings and portfolio composition

Top holdings

VBK’s top holdings are individual small‑cap growth companies selected by the CRSP index methodology and weighted by market capitalization. Because VBK focuses on the small‑cap growth segment, the largest positions are typically small‑cap companies with strong growth metrics rather than mega‑cap names.

Examples of the types of companies that can appear in VBK’s top 10 (illustrative — holdings change periodically):

Small‑cap technology firms with above‑average revenue/earnings growth
Healthcare or biotech companies with strong R&D or revenue momentum
Consumer discretionary names targeting niche markets

Investors should consult the fund’s most recent holdings report for the current top holdings and their weightings; the composition may change with quarterly rebalancing and market moves.

Sector allocations

VBK often exhibits sector tilts compared with broad U.S. market funds. Typical sector weightings that influence the fund’s performance include:

Information Technology: commonly a leading sector within small‑cap growth due to many technology companies classified as small caps.
Industrials: cyclical small businesses with growth characteristics may represent a meaningful share.
Health Care: biotech and specialty healthcare firms with growth profiles often feature in the portfolio.
Consumer Discretionary: niche consumer franchises with expansion plans may appear.

Sector tilts matter because growth‑oriented sectors can amplify gains in bull markets and increase drawdowns in downturns. The CRSP index rules and market‑driven price movement are the main drivers of these allocations.

Turnover and replication

VBK’s turnover rate reflects how frequently the fund’s underlying index reconstitutes holdings and whether Vanguard employs full replication or sampling. For broad small‑cap growth indices, Vanguard may use representative sampling when full replication would be costly or operationally challenging. Representative sampling selects a subset of index constituents that collectively replicate the index’s aggregate risk and return characteristics.

Turnover is typically moderate for index funds tied to annual or quarterly reconstitutions; investors should review the fund’s annual report or factsheet to see the reported turnover percentage for a specific reporting period.

Index tracked

VBK tracks the CRSP US Small Cap Growth Index, a benchmark designed to capture the performance of U.S. small capitalization companies with growth characteristics.

Key elements of the CRSP US Small Cap Growth Index methodology:

Universe definition: CRSP defines eligible securities based on U.S. market capitalization thresholds that identify small‑cap companies relative to the overall U.S. market.
Growth classification: securities are classified as growth when they exhibit higher historical or forecasted growth metrics (e.g., earnings and sales growth) and certain valuation profiles compared with the broader small‑cap universe.
Weighting: constituents are weighted primarily by market capitalization, subject to CRSP’s diversification and liquidity rules.

The CRSP index provider maintains the methodology and publishes periodic reconstitution and reweighting schedules. Tracking the CRSP small‑cap growth index gives VBK exposure to a rules‑based growth segment within the U.S. small cap market.

Performance

Historical returns

When presenting VBK’s historical returns, standard multi‑period frames commonly used are year‑to‑date (YTD), 1‑year, 3‑year, 5‑year, and since‑inception returns. For an apples‑to‑apples comparison, returns should be shown net of VBK’s expense ratio and contrasted against the CRSP US Small Cap Growth Index (the fund’s benchmark) as well as relevant peer groups such as other small‑cap growth ETFs.

Investors should note:

Small‑cap growth performance tends to be cyclical: strong in growth‑led rallies and more volatile during risk‑off periods.
Comparing VBK to a broad small‑cap index or a large‑cap growth index will show different return and risk profiles due to size and style effects.

When using any historical performance figures, always cite the observation date and whether returns are total returns (including dividends) or price returns. As of June 30, 2024, official Vanguard materials provide the most recent trailing returns for VBK and should be consulted for current performance values.

Risk and volatility metrics

Key risk measures to evaluate VBK include:

Standard deviation: measures the fund’s return volatility over a given timeframe.
Beta: sensitivity of VBK’s returns relative to a broad market benchmark (for example, the Russell 3000 or S&P 500).
Sharpe ratio: risk‑adjusted return relative to a risk‑free rate.
Maximum drawdown: the largest historical peak‑to‑trough decline over a specified period.

Small‑cap growth funds typically show higher standard deviation and beta compared with large‑cap funds because small companies tend to have more idiosyncratic risk and less diversified revenue streams. Investors should weigh these risk metrics against their risk tolerance and investment horizon.

Trading, pricing and market structure

Market price vs NAV

VBK is an ETF and trades on the exchange at a market price that can differ slightly from its net asset value (NAV). Small deviations (premiums or discounts) are common and generally small for liquid ETFs like VBK, but they can widen during periods of market stress or low liquidity.

Authorized participants (APs) and market makers help keep the market price close to NAV by arbitraging price differences through creation/redemption activity. As a passive index ETF with a large and diverse shareholder base, VBK’s intraday market price typically tracks NAV closely under normal conditions.

Intraday Indicative Value (IIV/IOV) and liquidity

The Intraday Indicative Value (IIV or IOV) provides real‑time estimates of the ETF’s per‑share NAV throughout the trading day. Traders use the IIV/IOV to assess whether VBK’s market price is trading at a premium or discount relative to estimated NAV.

Liquidity drivers for VBK:

Underlying liquidity of small‑cap stocks: some small‑cap constituents trade less frequently than large caps, which can influence ETF spreads.
Creation/redemption mechanism: the ability of APs to transact with the ETF helps supply or withdraw shares to maintain price alignment.
Market‑maker activity and ETF share supply: active market makers and adequate float typically produce tight bid/ask spreads.

When intraday volatility is high, spreads and premiums/discounts can widen, particularly given the smaller market caps of underlying securities.

Options and derivatives

Options markets exist for many ETFs, but availability and liquidity vary by ticker. Traders interested in derivatives strategies (covered calls, protective puts, spreads) should verify whether listed options exist for VBK and examine open interest and bid/ask spreads to gauge practical tradability.

For investors who want to monitor VBK and deploy portfolio strategies, Bitget’s research and portfolio monitoring tools can be used to track performance and alerts. Note: this article does not imply that VBK options are offered on Bitget; it recommends using Bitget’s analytics and wallet features for research and monitoring.

Distributions and tax considerations

VBK distributes dividends and realized capital gains per its underlying holdings and index transactions. Key tax considerations for U.S. investors include:

Dividend treatment: qualified dividends from U.S. companies may be taxed at preferential long‑term capital gains rates if holding period and other IRS rules are met; nonqualified dividends are taxed at ordinary income rates.
Capital gains: ETFs are generally tax‑efficient because in‑kind creation/redemption mechanisms can reduce the likelihood of taxable capital gains, but gains can still occur and are distributed when realized.
SEC yield and reported yield: funds publish standardized yield metrics (for example, 30‑day SEC yield) that help compare income characteristics across funds.

Tax details are investor‑specific; consult a tax advisor for individual tax treatment. Vanguard’s prospectus and annual tax reporting provide authoritative tax distribution details for VBK.

Management and governance

Vanguard’s index fund teams — often described as the Vanguard Equity Index Group or Vanguard’s quantitative equity teams — manage VBK. Key governance elements:

Vanguard acts as the fund sponsor and investment manager, responsible for replication, trading, and shareholder communications.
Trustees and an independent board provide oversight consistent with mutual fund/ETF governance standards.
CRSP serves as the index provider, maintaining the index methodology and reconstitution schedules under a vendor relationship with Vanguard.

Vanguard’s low‑cost operating model and index experience are important governance features that influence VBK’s fee structure and tracking efficiency.

Fees, expenses and tracking

VBK’s headline expense ratio (historically 0.07%) is a primary determinant of investor costs. Additional investor costs include bid/ask spreads when trading shares and potential market impact if transacting large orders.

Tracking error is the metric that captures the difference between VBK’s returns and its benchmark (the CRSP US Small Cap Growth Index). Factors affecting tracking error include management fees, sampling decisions, securities lending income, and transaction costs from rebalancing. Low expense ratios and efficient replication practices are intended to minimize tracking error for VBK.

Investors should review the fund’s factsheet for reported tracking difference and expense data for a chosen reporting period.

Risks

Principal risks associated with vbk stock include:

Small‑cap risk: smaller companies generally have greater volatility, lower liquidity, and higher sensitivity to economic cycles than larger firms.
Growth‑style concentration risk: growth‑oriented portfolios may suffer sharper drawdowns during market rotations away from growth sectors.
Market risk: as an equity fund, VBK is subject to market wide fluctuations and loss of principal.
Sector concentration risk: sector tilts (for example, technology or healthcare) can amplify sector‑specific shocks.
Liquidity risk: some underlying small‑cap securities may trade thinly, which can affect the ETF during stressed markets.
Tracking/management risk: imperfect replication, sampling, or operational issues could lead to tracking differences.

All investors should weigh these risks against their investment goals and time horizon; the fund’s prospectus outlines detailed risks and fund‑specific disclosures.

Use in portfolios

VBK is commonly used by investors seeking targeted exposure to U.S. small‑cap growth equities. Typical uses include:

A tactical or strategic allocation to small‑cap growth within a diversified equity sleeve.
A satellite holding to complement a core large‑cap allocation, adding potential for higher growth and diversification benefits.
A single‑ticket solution for investors who prefer passive, low‑cost index exposure to small‑cap growth.

Suitability considerations:

VBK is more appropriate for investors with a higher risk tolerance and a longer investment horizon because of small‑cap volatility.
Investors looking for income or capital preservation may prefer different allocations or funds with a value tilt or dividend focus.

Comparisons and similar products

VBK competes in the small‑cap growth ETF space. Comparable vehicles include other small‑cap growth ETFs and index funds that track similar universes. When comparing, investors typically look at:

Expense ratio
Index methodology (CRSP vs. other providers)
Holdings overlap and sector tilts
Liquidity and trading spreads
Historical tracking error and performance vs benchmark

When deciding between VBK and alternatives, check each fund’s factsheet for up‑to‑date holdings, fees, and performance metrics.

Historical milestones and notable events

Important dates and events in VBK’s history include:

Launch/inception: January 26, 2004 — VBK’s establishment as Vanguard’s small‑cap growth ETF.
Periodic reconstitutions: the CRSP index rebalances periodically, which affects holdings and sector composition.
AUM milestones and flows: VBK’s assets under management have grown as investor interest in low‑cost ETFs has increased; track AUM changes over time through Vanguard’s reports.

For definitive historical documents (prospectuses, annual reports, shareholder notices), consult Vanguard’s fund literature and regulatory filings.

Research, ratings and analyst coverage

Major data providers and research platforms cover VBK with metrics such as Morningstar ratings, analyst commentary, risk statistics, and performance comparisons. Commonly referenced metrics include expense ratio, risk‑adjusted returns, holdings, and historical tracking versus CRSP benchmarks.

Investors should consult multiple sources (fund prospectus, Vanguard factsheets, independent data providers) to validate figures and understand methodological differences in ratings.

References

Sources used to compile this guide include Vanguard’s official fund materials and factsheets, CRSP index methodology documents, Morningstar portfolio and rating data, and major financial data aggregators for market and holdings snapshots. For time‑stamped metrics referenced above: "As of June 30, 2024, according to Vanguard’s public fund reports".