Small-Cap Showdown: How Vanguard's VB Compares to Schwab's SCHA on Fees, Risk, and Diversification
The Motley Fool
by newsfeedback@fool.com (Katie Brockman)February 23, 2026
AI-Generated Deep Dive Summary
The article compares two of the most popular small-cap index ETFs: the Schwab U.S. Small-Cap ETF (SCHA) and the Vanguard Small-Cap ETF (VB). While both offer broad exposure to U.S. small-cap stocks, they differ in fees, risk profiles, sector focus, and diversification strategies. Investors looking for cost-effective access to small-cap stocks must weigh these trade-offs to determine which ETF aligns best with their financial goals and risk tolerance.
One key difference lies in expense ratios: SCHA charges a slightly higher fee than VB, at 0.19% versus 0.14%. This may seem minor, but over time, the lower fees of VB can result in significant savings for long-term investors. Additionally, VB’s broader diversification across more companies and sectors provides stability, whereas SCHA may offer more concentrated exposure to certain industries, which could amplify returns or risks depending on market conditions.
Both ETFs track similar indices—the Russell 2000 Index—but their sector tilts differ slightly. For example, SCHA has a higher allocation to consumer discretionary and technology sectors, while VB skews more toward financials and industrials. This divergence can impact performance during market cycles: SCHA might benefit from growth trends in tech and consumer spending, while VB could be more resilient during economic recoveries due to its focus on cyclical sectors.
Understanding these differences is crucial for investors seeking small-cap exposure. While both ETFs are well-diversified and cost-effective compared to actively managed funds, the choice between SCHA and VB depends on factors like risk tolerance, sector preferences, and long-term investment horizons. For those prioritizing lower
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Originally published on The Motley Fool on 2/23/2026