VB vs ISCB: Which Small-Cap Index ETF Should You Pick Today?

The Quick Breakdown

When building a small-cap portfolio, Vanguard’s VB and iShares’ ISCB both offer solid entry points, but they’re not identical twins. ISCB charges a hair cheaper at 0.04% versus VB’s 0.05%, yet that’s a rounding error in real money. The real story lies elsewhere: VB is a $163 billion juggernaut that’s been crushing it for two decades, while ISCB is a more niche $257 million player that occasionally outperforms on shorter timelines.

How Do They Actually Perform?

Here’s where things get interesting. Over the past year (as of December 2025), ISCB grabbed a 14.3% return, beating VB’s 10.5%. Looks good on paper, right? But zoom out to five years, and the picture flips: a $1,000 investment in VB grew to $1,493, compared to ISCB’s $1,480. VB has delivered 9.6% annualized returns since 2004, while ISCB managed 8.5% over the same period.

Both funds experienced similar volatility during downturns—VB’s max drawdown hit 28.15% over five years, while ISCB dipped to 29.94%. Dividend yields are virtually identical at 1.3% for each.

What’s Under the Hood?

ISCB holds roughly 1,540 stocks tracked via a Morningstar index with a quantitative scoring system. The portfolio tilts 19% toward industrials, 16% to tech, and notably, 15% to financials. Top picks include Ciena, Coherent, and Rocket Lab—all under 0.6% each.

VB, by contrast, holds around 1,357 stocks from the CRSP U.S. Small Cap Index. It’s slightly more industrials-heavy (20%) and tech-focused (18%), with lighter financial exposure. Major holdings like Insmed, Comfort Systems USA, and SoFi Technologies don’t exceed 0.7% of the fund.

ISCB’s broader roster means more diversification, but VB’s strategic weighting has historically delivered better risk-adjusted returns.

The Trading Reality

This is where VB pulls away hard. With $163 billion in assets under management, VB trades with serious liquidity and tight spreads. ISCB’s $257 million AUM is respectable but sits at a different scale entirely. If you’re a large investor making frequent trades, VB’s depth matters. Transaction costs on ISCB could chip away at returns if you’re constantly in and out.

So Which Small-Cap Index Play Wins?

Unless you have a specific reason to prefer ISCB’s slightly broader holdings, VB’s superior long-term track record and significantly deeper liquidity make it the default choice for most investors. VB’s 10 and 20-year outperformance isn’t luck—it’s the compounding effect of better implementation and market dominance.

Both are excellent low-cost small-cap vehicles, and either would beat concentrated mega-cap tech portfolios for diversification. But if you’re building a buy-and-hold position in small-cap stocks today, VB’s proven stability and liquid marketplace give it the edge.