VB vs IJR

VB (Vanguard) tracks the CRSP US Small Cap Index, holding well over a thousand stocks that reach into micro-cap territory. IJR (iShares) tracks the S&P SmallCap 600, which applies a profitability screen before a company can be included.

That profitability filter is the most important structural difference: the S&P 600 has historically excluded unprofitable small companies, which has given it a modest quality edge over broader small-cap indexes.

Academic research has linked the S&P 600's earnings requirement to slightly better long-run risk-adjusted returns versus unscreened small-cap indexes. VB's broader net captures more of the market but includes speculative, unprofitable names.

In practice the return difference is small and varies by period, but investors who specifically want the 'quality small-cap' effect often prefer IJR.

Both are cheap and well-run. VB suits investors who want maximum small-cap breadth as part of a total-market approach; IJR suits those who want the profitability-screened index. Neither is a mistake.

Investors seeking the small-cap value premium specifically should look instead at VBR or AVUV, which tilt toward cheaper small companies.