Quick Read – Vanguard Small-Cap ETF (VB) holds 1,300 US small-cap stocks with a 0.05% expense ratio and has returned 156% over the past decade by using a buffer methodology that reduces forced selling compared to the Russell 2000. iShares Russell 2000 ETF (IWM) is up 35% over…
e year versus VB’s 10%, but VB has outperformed over five years (41% vs 29%) and ten years due to less frequent rebalancing. – Kevin Warsh’s appointment as Federal Reserve Chair increases the credibility of a gradual rate-cut cycle that disproportionately benefits small caps, which carry more floating-rate debt than megacaps, making VB an attractive 5% to 15% portfolio sleeve for investors seeking exposure to small-cap recovery. – The analyst who called NVIDIA in 2010 just named his top 10 stocks and Vanguard Small-Cap ETF wasn’t one of them. Get them here FREE
The Vanguard Small-Cap Index Fund ETF (NYSEARCA:VB) does not hold penny stocks. VB tracks the CRSP US Small Cap Index, where the median holding is a company worth several billion dollars. With Kevin Warsh reportedly the incoming Federal Reserve Chair, the rate-cut path that small caps have been pricing in for months gets a more credible sponsor, and VB is the cheapest, broadest way to own that trade without picking individual names.
Warsh is pro rate cuts even if he is more hawkish than some of the other Trump shortlist candidates. So the easing will be gradual. Inflation is running at 3.8%, which means cuts arrive slowly, not in one dramatic move.