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The Vanguard Small-Cap Growth ETF offers a much lower expense ratio and higher assets under management than the Invesco S&P SmallCap 600 Pure Growth ETF.
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RZG outperforms VBK in one-year total returns, but both showed almost identical declines and long-term growth.
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VBK has many more shares and is tilted towards technology, while RZG is more tilted towards healthcare.
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He Vanguard Small Cap Growth ETF (NYSEMKT:VBK) stands out for its ultra-low costs, its deep liquidity and its greater diversification, while the Invesco S&P SmallCap 600 Pure Growth ETF (NYSEMKT:RZG) offers marginally higher recent performance and a more concentrated portfolio with an emphasis on healthcare.
Both RZG and VBK aim to capture US small-cap growth stocks, but take different approaches to portfolio construction, sector exposure and fees. This comparison breaks down how the two funds compare in terms of cost, performance, risk, portfolio composition, and practical considerations for investors seeking exposure to small-cap growth.
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Metric
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RZG
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VBK
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Editor
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Invesco
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Vanguard
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Expense ratio
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0.35%
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0.07%
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1 year return (from 01/09/2026)
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15.9%
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14.4%
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Dividend yield
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0.4%
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0.5%
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AUM
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108.6 million dollars
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$39.7 billion
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Beta measures price volatility relative to the S&P 500; Beta is calculated from five-year weekly returns. The 1-year return represents the total return over the past 12 months.
VBK is noticeably more affordable with an expense ratio of 0.07% compared to RZG’s 0.35% and pays a slightly higher dividend yield. The difference in fees favors VBK for cost-conscious investors, while the slightly higher yield may also appeal to those looking for a small increase in income.
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Metric
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RZG
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VBK
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Maximum reduction (5 years)
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-38.31%
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-38.39%
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$1,000 growth in 5 years
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$1,154
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$1,145
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VBK tracks a broad index of U.S. small-cap growth companies and currently owns 579 stocks, with the sector leaning toward technology (27%), industrials (21%), and healthcare (18%). His most important individual positions include Insmed Inc. (NASDAQ: INSM) at 1.44%, Comfort Systems USA Inc. (NYSE: FIX) at 1.13%, and SoFi Technologies Inc. (NASDAQ:SOFI) at 1.11% of assets. The fund’s 22-year track record and diversified holdings can help reduce idiosyncratic risk compared to more concentrated strategies.
RZG, on the other hand, is built around the S&P SmallCap 600 Pure Growth Indexwith a greater focus on healthcare (26%), followed by manufacturing (18%) and financial services (16%). Its main holdings: ACM Research Inc. (NASDAQ:ACMR), PTC Therapeutics Inc. (NASDAQ:PTCT)and Progyny Inc. (NASDAQ:PGNY) — each represents a slightly larger portion of the portfolio than VBK’s biggest names. With 131 stocks, RZG is less diversified and may be more sensitive to swings in its favored sectors.
For more guidance on investing in ETFs, check out the full guide at this link.
While the Vanguard Small-Cap Growth ETF (VBK) and the Invesco S&P SmallCap 600 Pure Growth ETF (RZG) focus on small-cap growth stocks, each uses a different approach that deserves consideration.
RZG tracks the S&P SmallCap 600 Pure Growth Index, but targets a smaller subset of stocks that exhibit strong growth characteristics. That’s why the ETF only has 131 holdings. But this leads to less diversification, which can increase risk.
VBK has a lot to offer. With nearly 600 stocks, the ETF is highly diversified and offers less company-specific risk. Your expense ratio is low. Its assets under management are close to $40 billion, a figure much higher than that of RZG, which gives it greater liquidity. However, its beta version 1.4 is slightly higher than RZG’s 1.2.
RZG is best for investors looking for an ETF with the potential to outperform and who are comfortable with higher fees and concentration risk. VBK is for investors who want to hold their stocks for the long term and want low costs with broader exposure to the small cap growth market.
ETF (exchange-traded fund): A fund containing a basket of securities, which trades on an exchange like a stock.
Expense ratio: Annual fund operating costs expressed as a percentage of average fund assets.
Assets under management (AUM): The total market value of all assets managed by a fund.
Dividend yield: Annual dividends per share divided by the current share price, shown as a percentage.
Beta: A measure of the volatility of an investment compared to the broader market, often the S&P 500.
Total profitability: Investment performance, including price changes plus all dividends and distributions, assuming reinvestment.
Maximum reduction: The largest drop in value between peak and trough during a specific period.
Small Cap: Companies with relatively small stock values, typically between a few hundred million and a few billion dollars.
Growth Stocks: Companies hoped to grow their profits or revenues faster than the broader market, often by reinvesting profits.
Sector inclination: When a fund invests more in certain industries than the market or benchmark index in general.
Diversification: Spread investments across many securities or sectors to reduce the impact of a single holding.
Idiosyncratic risk: Risk specific to a particular company or sector, unrelated to general market movements.
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Robert Izquierdo has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Comfort Systems USA, Progyny and Vanguard Index Funds – Vanguard Small-Cap Growth ETF. The Motley Fool has a disclosure policy.
Best Small Cap ETF: Vanguard’s VBK vs. Invesco’s RZG was originally published by The Motley Fool
