Vanguard's VBR outperforms iShares IJJ with lower expenses and higher returns

The Vanguard Morningstar Small-Cap Value ETF (VBR) is gaining attention for its low expense ratio of 0.05%, significantly lower than the 0.18% charged by the iShares S&P Mid-Cap 400 Value ETF (IJJ). This difference in fees could make VBR a more attractive option for investors looking to minimize costs while gaining exposure to the small-cap segment of the U.S. stock market. As of August 2026, VBR manages over $67.8 billion in assets and includes a diversified portfolio of 841 holdings.

The interest in VBR is timely, as investors are increasingly seeking cost-effective investment options amid fluctuating market conditions. The Vanguard fund focuses exclusively on small-capitalization stocks, which typically represent companies with a market capitalization of less than $2 billion. In contrast, IJJ targets mid-size companies that aim to combine the stability of larger firms with the growth potential of smaller ones. This distinction may attract different types of investors depending on their risk tolerance and investment goals.

In terms of performance, VBR has outperformed IJJ over the past year, delivering a return of 23.9% compared to IJJ's 19.6%. Additionally, VBR offers a slightly higher dividend yield of 1.7% compared to IJJ's 1.5%. The diverse holdings in VBR include sectors like Financial Services, Industrials, and Consumer Cyclical, with notable positions in companies like Jabil and NRG Energy. On the other hand, IJJ holds 303 stocks, with a heavier focus on Financial Services.

As investors weigh their options, the choice between VBR and IJJ may ultimately come down to individual investment strategies. VBR’s lower fees and higher potential returns may appeal to those looking for value in smaller companies, while IJJ could still be a viable option for those seeking exposure to mid-cap stocks. The performance of both funds will be closely monitored as market conditions evolve.