VB vs IWM ETF Comparison 2026: Vanguard Small-Cap vs iShares Russell 2000: AI Score, Valuation, Performance and Upside
VB and IWM both provide U.S. small-cap equity exposure, with IWM being the standard benchmark vehicle and VB offering a significantly cheaper alternative with a smoother index reconstitution process. IWM is preferred for active trading, options strategies, and institutional benchmark alignment; VB is preferred for cost-conscious long-term investors who want small-cap exposure without paying IWM's premium.
VB vs IWM is a cost-versus-benchmark-liquidity trade-off for small-cap exposure — VB saves nearly 4x in annual expenses with a more efficient index methodology, while IWM provides the deepest liquidity and options market depth for the standard Russell 2000 small-cap benchmark.
VB holds the edge across 4 of 5 key metrics in this comparison. IWM has delivered stronger 1-year price return (+17.21% vs +13.26% for VB).
- prefer the lowest cost small-cap ETF (0.05%) for long-term passive small-cap equity allocation
- value the CRSP methodology's smoother reconstitution process and lower portfolio turnover
- want small-cap core exposure without the small-cap ETF premium for liquidity or benchmark alignment
- are comfortable with a less recognized index benchmark in exchange for dramatically lower costs
- prefer the most liquid small-cap ETF with the deepest options market for tactical allocation and hedging
- value alignment with the Russell 2000 — the globally recognized standard small-cap benchmark
- want to run covered calls, protective puts, or other options strategies on small-cap exposure
- are comfortable paying 0.19% expense ratio for maximum execution flexibility and benchmark tracking
| Metric | VB | IWM |
|---|---|---|
| ETF scorei | 69.0 | 71.0 |
| Latest closei | $289.61 | $284.10 |
| 1M returni | -5.34% | -5.59% |
| 6M returni | +13.34% | +17.88% |
| 1Y returni | +13.26% | +17.21% |
The ETF score weights long-term returns and risk-adjusted performance most heavily, but still rewards low expense ratios, larger fund size, and broader diversification — so it can favor low-cost, broad, mega-cap funds over smaller thematic or actively-managed funds even when the latter have delivered stronger returns.
How much would $10,000 be worth today if invested at the start of each period, with all dividends reinvested?
| Period | VB | IWM |
|---|---|---|
| 1Y ago | $11.48K (+14.8%) started 2025-09-18 | $11.84K (+18.4%) started 2025-09-18 |
| 5Y ago | $15.39K (+53.9%) started 2021-09-20 | $14.93K (+49.3%) started 2021-09-20 |
| 10Y ago | $32.6K (+226.0%) started 2016-09-19 | $30.18K (+201.8%) started 2016-09-19 |
Hypothetical — past performance does not guarantee future results.
| Metric | VB | IWM |
|---|---|---|
| Expense ratioi | 0.03% | 0.19% |
| Total assets (AUM)i | $185.27B | $80.46B |
| Dividend yieldi | 1.21% | 0.90% |
| Trailing P/Ei | 19.45 | 16.73 |
| Betai | 1.09 | 1.16 |
| 52-week change | 13.26% | 17.21% |
| Metric | VB | IWM |
|---|---|---|
| 1Y returni | +13.26% | +17.21% |
| 6M returni | +13.34% | +17.88% |
| 1M returni | -5.34% | -5.59% |
| 1Y Sharpe ratio | 0.58 | 0.71 |
| Betai | 1.09 | 1.16 |
| Dividend yieldi | 1.21% | 0.90% |
| 5Y CAGR | +7.34% | +6.90% |
Over the past year, VB and IWM have moved strongly in the same direction (correlation of 0.96), based on daily returns.
Lower drawdown and smaller single-period drops generally indicate a smoother ride, though they do not guarantee lower future risk.
| Period | Metric | VB | IWM |
|---|---|---|---|
| 1Y | Growthi | +13.26% | +17.21% |
| CAGRi | +13.27% | +17.23% | |
| Volatilityi | 16.05% | 18.60% | |
| Sharpe ratioi | 0.58 | 0.71 | |
| Sortino ratioi | 0.84 | 1.03 | |
| Max drawdowni | 8.98% | 11.03% | |
| Current drawdowni | 6.36% | 6.64% | |
| Avg drawdowni | 1.93% | 2.37% | |
| Ulcer Indexi | 2.73% | 3.33% | |
| Max daily dropi | 2.97% | 3.55% | |
| Max wkly dropi | 4.30% | 4.62% | |
| 5Y | Growthi | +42.42% | +39.57% |
| CAGRi | +7.34% | +6.90% | |
| Volatilityi | 20.67% | 22.40% | |
| Sharpe ratioi | 0.23 | 0.21 | |
| Sortino ratioi | 0.33 | 0.30 | |
| Max drawdowni | 28.15% | 31.91% | |
| Current drawdowni | 6.36% | 6.64% | |
| Avg drawdowni | 9.63% | 13.38% | |
| Ulcer Indexi | 12.39% | 16.32% | |
| Max daily dropi | 6.72% | 6.42% | |
| Max wkly dropi | 12.92% | 12.38% | |
| 10Y | Growthi | +177.96% | +163.20% |
| CAGRi | +10.77% | +10.17% | |
| Volatilityi | 21.37% | 23.00% | |
| Sharpe ratioi | 0.38 | 0.34 | |
| Sortino ratioi | 0.52 | 0.48 | |
| Max drawdowni | 42.05% | 41.13% | |
| Current drawdowni | 6.36% | 6.64% | |
| Avg drawdowni | 7.24% | 9.89% | |
| Ulcer Indexi | 10.48% | 13.34% | |
| Max daily dropi | 13.08% | 13.27% | |
| Max wkly dropi | 22.91% | 24.00% |
| Category | VB | IWM |
|---|---|---|
| Fund name | Vanguard Morningstar Small-Cap ETF | iShares Russell 2000 ETF |
| Type | ETF | ETF |
| Expense ratioi | 0.03% | 0.19% |
| Total assets (AUM)i | $185.27B | $80.46B |
| Dividend yieldi | 1.21% | 0.90% |
- 0.05% expense ratio is dramatically lower than IWM's 0.19%, saving significant costs over long holding periods
- CRSP index reconstitution methodology reduces turnover relative to the Russell 2000's annual June reconstitution event
- Slightly higher average market cap than IWM provides a marginal quality tilt within the small-cap universe
- Most liquid small-cap ETF globally, with the deepest options market for hedging and tactical strategies
- Alignment with the Russell 2000 benchmark allows investors to measure performance against the standard small-cap index
- Extremely high daily trading volume and tight bid-ask spreads support large institutional block transactions
- IWM is the benchmark for small-cap investors globally — VB's CRSP index is less recognized, potentially causing tracking differences vs small-cap benchmarks
- Lower AUM and trading volume than IWM means slightly wider bid-ask spreads for large trades
- Small-cap stocks are more economically sensitive and tend to underperform in risk-off environments
- 0.19% expense ratio is nearly 4x more expensive than VB's 0.05%
- Russell 2000 annual June reconstitution causes significant turnover and front-running by index arbitrage traders
- Russell 2000 includes more micro-cap and financially distressed companies than CRSP, resulting in higher-risk small-cap exposure
Want deeper AI forecasts?
This comparison page is public and free forever. Subscribers can unlock saved watchlists, full AI rankings, detailed forecasts, and interactive analysis tools.