What does expense ratio actually mean?

The expense ratio represents the annual fee charged by a fund to manage investors' money, expressed as a percentage of assets under management. This fee covers management services, administrative tasks, and other operational costs. It directly impacts your investment returns because it is deducted from your holdings. For instance, a lower expense ratio generally means that more of your investment capital is working for you rather than paying fund costs, which can compound into significant savings over time. When comparing funds, always look at this figure to understand the cost-benefit of each option.

How do sector weights work?

Sector weights are the percentages of a fund's total assets allocated to different industry groups like Technology, Healthcare, or Financial Services. When you see a sector weight figure, it shows you how diversified your investment is across various economic sectors. For example, if a fund has 30% in technology stocks, this means almost a third of your investment is linked to tech companies' performance. These weights help you assess risk and concentration, ensuring you know exactly where the fund manager is placing assets. Understanding sector weight breakdowns prevents overexposure to a single industry.

Why is the index tracked important?

The index that a fund tracks acts as a roadmap for its investment strategy. By knowing the index, you understand which segment of the market the fund mirrors. This helps you grasp the specific market conditions and performance metrics the fund aims to replicate. For example, if a fund tracks a small-cap index, it invests in companies with smaller market capitalizations, typically meaning higher risk and potentially higher reward compared to large-cap indices. Without a tracked index, the fund's strategy may be based on active management decisions rather than passive market replication.

Which fund has lower expenses?

The Vanguard Small-Cap Value ETF (VBR) has an expense ratio of 0.05%, compared to 0.10% for the Vanguard S&P Small-Cap 600 Value ETF (VIOV). This means VBR charges 5 basis points less than VIOV, representing a 50% lower cost in this context. While this difference might seem small, over time, lower expenses can significantly impact returns due to compounding. Investors choosing between these funds should consider how much they value cost efficiency and the potential for long-term savings.

What types of companies are in these funds?

VBR and VIOV are both focused on small-cap value stocks. However, the specific holdings differ. VBR's top holdings include names like MRNA and JBL, representing diverse sectors, while VIOV's top holdings include PAYC and MTCH, which are recognizable consumer brands. VIOV tends to favor profitable, established smaller companies due to the S&P Small-Cap 600 index methodology, potentially offering a tilt toward stability and recognizable brands. Understanding the composition helps you align your portfolio with your preferences for specific types of companies.

Do these funds pay dividends?

Yes, both VBR and VIOV pay dividends. VBR has a dividend yield of 1.81%, while VIOV's yield is slightly lower at 1.73%. These yields represent the annual dividends paid by the fund as a percentage of its current market price. Investors seeking income might find these yields useful for their portfolio's cash flow. It is important to remember that dividends are not guaranteed and can fluctuate based on the performance and payout policies of the underlying companies.

Which fund has a longer track record?

VBR has a longer track record, having been launched on January 26, 2004, compared to VIOV, which began on September 7, 2010. This means VBR has six more years of historical performance data available for analysis. A longer track record can be advantageous for investors wanting to evaluate the fund's performance across different market cycles. VIOV, being newer, lacks this depth of history, which may be a consideration for those who prioritize long-term consistency and established performance benchmarks.

How do they perform in different market conditions?

Small-cap value funds like VBR and VIOV typically perform well in growing economies where smaller companies can thrive. They are considered more volatile than large-cap stocks, meaning they can have larger swings in price, especially during economic downturns. VBR's top holdings suggest a diverse portfolio that might be more resilient, whereas VIOV's focus on recognizable brands may offer stability during uncertain times. Investors should be prepared for potential volatility and diversify their portfolios to mitigate risks associated with small-cap investments.

What is the market capitalisation focus?

Both funds primarily invest in small-capitalisation stocks, targeting companies with market capitalizations generally between $300 million and $2 billion. Small-cap stocks often have greater growth potential compared to their larger counterparts but can be more volatile. VBR and VIOV are designed to provide exposure to this segment of the market, allowing investors to tap into the growth of emerging companies while balancing risk through a diversified portfolio. Be aware that small-cap investments carry additional risks due to the size and stability of the underlying companies.

What is the liquidity like?

VBR, with net assets of $37 billion, offers deep liquidity, making it easier for investors to buy or sell shares at competitive prices with minimal impact. In contrast, VIOV has net assets of $1.8 billion, which could result in wider bid-ask spreads. High liquidity generally means investors can trade large amounts without significantly affecting the fund's price, while low liquidity can lead to potential trading difficulties and increased costs. When choosing between these funds, consider your need for easy trading.

Are there any tax implications?

Yes, there are tax implications to consider. Dividends received from ETFs are generally taxed as ordinary income or qualified dividends, depending on the nature of the income. Additionally, capital gains taxes may apply when shares are sold. VBR's lower dividend yield of 1.81% versus VIOV's 1.73% does not significantly change tax outcomes. Consult with a tax professional to understand how specific distributions might affect your tax situation.

This content is for informational and educational purposes only and should not be considered as financial advice, recommendation or solicitation to buy or sell securities. Always conduct thorough research or consult with a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results, and all investments carry inherent risks including the potential loss of principal. The information provided may not be suitable for all investors due to their varying objectives, financial situations or needs.

VBR vs VIOV

Two funds, one decision: we compare cost, performance and what each ETF actually holds in September 2026.

Compare VBR and VIOV, two Vanguard small-cap value ETFs. Explore fees, holdings, dividends and index focus, plus how each tracks the market. Educational content, not financial advice.

Fund Snapshot

Key Fund Metrics

VBR

Metric

VIOV

0.05%

Expense Ratio

0.10%

1.81%

Dividend Yield

1.73%

$36.98B

Net Assets

$1.80B

847

Holdings

466

Jan 26, 2004

Inception Date

Sep 7, 2010

–

Index Tracked

–

Small Value

Fund Category

Small Value

VBR costs about $5.00 less per year for every $10,000 invested.

Shared Top Holdings

These funds do not share any of their top holdings.

Discover More Comparisons

AVUV vs VIOV

Compare AVUV and VIOV small cap value ETFs. Review fees, dividends, holdings, track records and index tracking methods in this factual ETF comparison.

VIOO vs VIOV

Compare VIOO vs VIOV ETFs. Analyse fees, holdings, dividends and tracking. VIOO has 0.07% expense; VIOV has 1.73% yield. Both launched Sep 2010.

Investment Analysis

VBR

Pros

VBR offers a low expense ratio of 0.05%, reducing annual investment costs significantly.
Net assets of $37.0 billion support deep liquidity and tighter bid-ask spreads for traders.
Inception in 2004 provides a long track record for this small-cap value fund.

Considerations

Index methodology and sector weights are not available, limiting transparency into the underlying strategy.
Top holdings are highly dispersed, with the largest at only 1.07%, potentially diluting conviction.
Dividend yield of 1.81% may lag investor income expectations versus higher-paying value alternatives.

VIOV

Pros

S&P Small-Cap 600 index inclusion criteria often favour profitable, established smaller firms.
Top holdings like PAYC and MTCH suggest a tilt toward stable, recognisable consumer brands.
Dividend yield of 1.73% reflects a focus on cash-generating small-cap value companies.

Considerations

Higher expense ratio of 0.10% increases annual costs compared to Vanguard's cheaper peer VBR.
Smaller asset base of $1.8 billion could result in wider trading spreads and liquidity risk.
Inception in 2010 means it lacks the longer historical performance record of similar funds.

About VBR and VIOV

VBR (VBR)

The Vanguard Small-Cap Value ETF (VBR) offers investors exposure to smaller companies that are often valued by the market at lower multiples relative to their earnings or book value. With net assets of approximately USD 36.98 billion and a low expense ratio of 0.05%, it aims to provide cost-efficient access to the US small-cap value sector. The fund holds over 840 individual stocks, diversifying risk across a broad range of companies. Historically, small-cap value strategies have been associated with higher potential returns, though they can also experience greater volatility compared to large-cap stocks. VBR pays a dividend yield of around 1.81%, offering a modest income stream. This ETF is suitable for those looking to complement a core portfolio with a factor tilt towards smaller, potentially undervalued businesses, keeping in mind that values can rise and fall.

VIOV (VIOV)

The Vanguard S&P Small-Cap 600 Value ETF (VIOV) offers investors exposure to a diversified basket of small-capitalisation U.S. companies that exhibit value characteristics. By tracking a specific segment of the U.S. equity market, this fund aims to capture returns associated with smaller, potentially undervalued firms that may offer growth opportunities as they mature. With an expense ratio of just 0.10%, VIOV is designed for cost-conscious investors seeking broad market access. The fund holds approximately 466 positions, providing a wide range of industry exposure while maintaining a focus on value metrics. As with any investment in equities, the value of the fund's shares can fall as well as rise, and past performance is not a reliable indicator of future results. It serves as a tool for portfolio diversification within the small-cap space.

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VBR vs VIOV

Fund Snapshot

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AVUV vs VIOV

VIOO vs VIOV

Investment Analysis

VBR

Pros

Considerations

VIOV

Pros

Considerations

About VBR and VIOV

Buy VBR or VIOV in Nemo

Zero Commission

Trusted & Regulated

6% Interest on Cash

Frequently asked questions

What does expense ratio actually mean?

How do sector weights work?

Why is the index tracked important?

Which fund has lower expenses?

What types of companies are in these funds?

Do these funds pay dividends?

Which fund has a longer track record?

How do they perform in different market conditions?

What is the market capitalisation focus?

What is the liquidity like?

Are there any tax implications?

Disclaimer

Fund Snapshot

About VBR and VIOV

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AVUV vs VIOV

VIOO vs VIOV