IWM vs VB: The Russell 2000 vs a Cheaper Small-Cap Alternative
IWM is the most-traded small-cap ETF in the world. VB is four times cheaper and broadly similar in exposure. For long-term investors, the cost gap matters.
IWM (iShares Russell 2000 ETF) and VB (Vanguard Small-Cap ETF) both provide exposure to US small-cap stocks, but with a significant cost difference. IWM charges 0.19% and tracks the Russell 2000 index — roughly 2,000 small-cap US companies including many unprofitable ones. VB charges just 0.05% and tracks the CRSP US Small Cap index with ~1,500 holdings, which tends to have a slightly higher-quality tilt and excludes the very smallest micro-caps. On $100K over 20 years, the 14 basis point fee gap compounds to roughly $3,500 more in fees paid to IWM. The exception: IWM dominates the small-cap options market, making it essential for options traders. Long-term buy-and-hold investors should prefer VB.
Whether the lower-cost fund suits your situation depends on your existing holdings, account type, tax situation, and how you use each fund. This is a cost comparison, not a personalized recommendation.
📋 IWM vs VB — Key Facts Side by Side
| Metric | IWM | VB |
|---|---|---|
| Fund Name | iShares Russell 2000 ETF | Vanguard Small-Cap Index Fund ETF Shares |
| Issuer | iShares | Vanguard |
| Tracks Index | Russell 2000 | CRSP US Small Cap |
| Expense Ratio | 0.19% | 0.05% ✓ |
| Cost per $10K/yr | $19.00 | $5.00 |
| AUM | $83.0B | $188.6B |
| Holdings | 2,000 | 1,500 |
| Inception | 2000 | 2004 |
| 1-Year Return | +32.62% | +22.61% |
| 3-Year Return | +18.58% | +15.90% |
| 5-Year Return | +6.93% | +7.41% |
| Dividend Yield | 0.88% | 1.19% |
| Holdings Overlap | See holdings overlap → | |
| Avg Bid-Ask Spread | 0.00% | 0.00% |
Expense ratio, AUM, and returns updated Jul 14, 2026 from ETF BFF database. Returns are annualised. Not investment advice.
📊 IWM vs VB — Annualised Returns
Annualised returns (trailing, price-based). Past performance does not guarantee future results.
🎯 Which Fund Fits Which Investor?
- already use iShares and prefer staying within one fund family
- want the lowest fees: saves ~$14/yr per $10K vs IWM
- already use Vanguard and prefer staying within one fund family
💰 What the Fee Difference Actually Costs
Adjust the numbers for your situation. This models each fund's expense ratio compounding against your balance over time.
Assumes a constant annual return reinvested, with each fund's expense ratio deducted yearly. Illustrative only; actual returns vary. Past performance does not guarantee future results.
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Side-by-side holdings overlap, sector breakdown, and live performance tabs, all in one place.
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❓ IWM vs VB — Frequently Asked Questions
New to ETF investing? See answers to the most common ETF questions →