VB vs VNQ
Vanguard Small Cap ETF vs Vanguard Real Estate ETF
Quick Verdict
VB has a lower expense ratio. VB delivered stronger 1-year returns. VB offers more diversification with 1112 holdings.
Side-by-Side Comparison
| Metric | VB | VNQ | Winner |
|---|---|---|---|
| Expense Ratio | 0.03% | 0.13% | |
| AUM | $81.5B | $38.2B | |
| Dividend Yield | 1.48% | 3.52% | |
| Holdings | 1,324 | 144 | |
| YTD Return | +17.82% | +13.37% | |
| 1Y Return | +29.09% | +13.85% | |
| 3Y Return (annualized) | +16.24% | +9.90% | |
| 5Y Return (annualized) | +8.18% | +2.33% | |
| Volatility (annualized) | 18.9% | 21.4% | |
| Max Drawdown | -61.0% | -75.8% | |
| Fund Family | Vanguard (US) | Vanguard (US) | |
| Category | Equity | Equity | |
| Inception | Jan 26, 2004 | Sep 23, 2004 |
VB vs VNQ Performance
Vanguard Small Cap ETF (VB) is a ETF from Vanguard (US) and Vanguard Real Estate ETF (VNQ) is a ETF from Vanguard (US). Over the past year VB returned +29.09% while VNQ returned +13.85%. Year to date, VB is up 17.82% versus a gain of 13.37% for VNQ.
Over three years, VB compounded at +16.24% per year against +9.90% for VNQ; over five years the annualized figures are +8.18% and +2.33% respectively. Across the full 22-year window we track, VB has the edge at +8.86% annualized vs +4.13%. Past performance does not guarantee future results.
Risk: Volatility and Drawdowns
VNQ has been the more volatile fund, with annualized monthly volatility of 21.4% compared with 18.9% for VB. Lower volatility generally means a smoother ride, though it often comes with lower long-run returns.
The deepest peak-to-trough decline in our data was -61.0% for VB and -75.8% for VNQ. Drawdown depth is worth weighing if you expect to sell during market stress rather than ride it out.
The two funds' monthly returns correlate at 0.77. They usually move together, but the gap leaves some room for diversification.
Fees and Cost Over Time
VB charges 0.03% per year while VNQ charges 0.13%. On a $10,000 position that is $3 vs $13 annually, a gap of $10 per year that compounds over a long holding period. On income, VB currently yields 1.48% against 3.52% for VNQ.
Holdings Overlap
VB and VNQ share 78 holdings out of 1178 unique holdings combined, representing a 6.2% weight overlap.
Moderate overlap means holding both could provide meaningful diversification benefits.
Frequently Asked Questions
Which is cheaper, VB or VNQ?
VB has an expense ratio of 0.03% while VNQ charges 0.13%. VB is the cheaper option. On a $10,000 investment, that is $10 per year of difference.
Which performed better, VB or VNQ?
Over the past year VB returned +29.09% vs +13.85% for VNQ, so VB leads on 1-year performance. Over the longest common window we track (22 years), VB annualized +8.86% vs +4.13% for VNQ. Past performance does not guarantee future results.
Which is riskier, VB or VNQ?
VNQ has been the more volatile fund at 21.4% annualized versus 18.9% for VB. Worst drawdown: VB -61.0% vs VNQ -75.8%.
Should I hold both VB and VNQ?
VB and VNQ have a monthly-return correlation of 0.77, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between VB and VNQ?
VB and VNQ share 78 common holdings with a 6.2% weight overlap. Combined, they hold 1178 unique securities.
Which pays a higher dividend, VB or VNQ?
VB yields 1.48% while VNQ yields 3.52%, so VNQ currently pays the higher dividend yield.
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