VB: Better Than Large Cap

Summary

• Small-cap stocks are under pressure due to rising borrowing costs and a weak macroeconomic outlook, but are still beating expectations with 11% YTD returns.
• The Vanguard Small Cap ETF is a well-diversified index across value and growth stocks, tracking the performance of the CRSP US Small Cap Index.
• Despite lagging behind the large-cap index, VB has seen $1.5bn in net inflows over the past year, indicating a healthy investor appetite.
• Bullish for lower concentration risk over large cap with decent risk-adjusted performance, strong underlying fundamentals, and the potential to outperform during rate cut.

Tim Platt/DigitalVision via Getty Images

Amid the high interest rate environment, small cap stocks are under increasing pressure to cope with rising borrowing costs and weak macroeconomic outlook. Even though small cap equities have underperformed the large cap broad market index, they

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.