Vanguard (VB) vs. State Street (SPSM) in a Small-Cap ETF Showdown

Vanguard Morningstar Small-Cap ETF (NYSEMKT:VB) offers significantly broader diversification across 1,357 holdings, while State Street SPDR Portfolio S&P 600 Small Cap ETF (NYSEMKT:SPSM) focuses on a more concentrated selection of 607 smaller companies.

Small-cap ETFs offer growth potential by capturing the "small-firm effect," in which smaller companies may outperform larger peers over long investment horizons. While both of these funds aim for low-cost exposure, they track different indexes -- the CRSP U.S. Small Cap Index versus the S&P SmallCap 600 Index -- resulting in distinct portfolios and risk profiles.

Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

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