IWM vs VB: fees, holdings and returns
IWM holds about 2,000 small US companies in the Russell 2000. VB holds about 1,300 small US companies in a Morningstar index. VB’s companies are a bit larger on average, and it charges a much lower fee. Over the same dates since January 2004, IWM returned about 8.5% a year and VB returned about 9.7% a year.
Written by the Tactfolio research team. Fund facts checked October 17, 2026. Prices through October 20, 2026.
Key points
- VB costs less: 0.03% a year against 0.19%.
- IWM started trading in May 2000. VB started in January 2004.
- Worst drops since 2004: IWM −58.6%, VB −59.6%.
- Daily correlation: 0.98 (1 means they always move together).
What is the difference between IWM and VB?#
The two indexes draw the small-company line in different places. Morningstar’s small-cap index includes companies a little larger than many in the Russell 2000, which stretches further down into tiny firms. That makes VB a bit steadier, with less in the smallest and youngest companies. IWM trades far more each day and has a very busy options market.
| Fact | IWM | VB |
|---|---|---|
| Full name | iShares Russell 2000 ETF | Vanguard Morningstar Small-Cap ETF |
| Issuer | iShares (BlackRock) | Vanguard |
| Expense ratio | 0.19% a year | 0.03% a year |
| Started trading | May 22, 2000 | January 26, 2004 |
| Tracks | Russell 2000 Index | Morningstar US Small Cap Index |
| Holdings | 1,983 holdings as of October 15, 2026 | 1,301 holdings as of September 30, 2026 |
| Type | US stocks, ETF | US stocks, ETF |
Fund facts checked on the iShares (BlackRock) IWM page and the Vanguard VB page.
Is IWM or VB cheaper?#
VB costs less: 0.03% a year against 0.19%. On $10,000, that is about $19 a year for IWM and $3 for VB. The fund takes its fee out of its own value a little each day, so you never get a bill.
IWM vs VB performance over the same dates#
Both funds are measured from January 2004 to October 2026, the dates both traded. IWM returned about 8.5% a year and VB returned about 9.7% a year. VB came out ahead over this period, which does not mean it will again.
| Measure | IWM | VB |
|---|---|---|
| $10,000 grew to | $64,234 | $81,339 |
| Total return | 542.3% | 713.4% |
| Return per year (CAGR) | 8.5% | 9.7% |
| Worst drop from a high | −58.6% | −59.6% |
| Volatility (how much it swings) | 23.8% | 22.4% |
| Last 12 months | 12.3% | 13.7% |
| Last 3 years, per year | 19.7% | 18.6% |
| Last 5 years, per year | 5.2% | 6.2% |
| Last 10 years, per year | 9.9% | 10.8% |
Prices through October 20, 2026. Figures use daily closing prices adjusted for splits, with dividends reinvested. They do not include taxes or the cost of buying and selling. Past results do not tell you what will happen next.
IWM and VB returns by year#
| Year | IWM | VB |
|---|---|---|
| 2026 (part of the year) | 12.8% | 12.8% |
| 2025 | 12.7% | 8.9% |
| 2024 | 11.4% | 14.2% |
| 2023 | 16.8% | 18.2% |
| 2022 | −20.5% | −17.5% |
| 2021 | 14.5% | 17.6% |
| 2020 | 20.0% | 19.2% |
| 2019 | 25.4% | 27.3% |
| 2018 | −11.1% | −9.3% |
| 2017 | 14.6% | 16.3% |
| 2016 | 21.6% | 18.4% |
| 2015 | −4.5% | −3.8% |
| 2014 | 5.0% | 7.6% |
| 2013 | 38.7% | 37.7% |
| 2012 | 16.7% | 18.3% |
| 2011 | −4.4% | −2.8% |
| 2010 | 26.9% | 28.1% |
| 2009 | 28.5% | 36.6% |
| 2008 | −34.1% | −36.2% |
| 2007 | −1.8% | 1.4% |
| 2006 | 18.3% | 15.8% |
| 2005 | 4.5% | 7.2% |
| 2004 (part of the year) | 13.2% | 15.9% |
Which fell further in bad times?#
A drawdown is how far a fund falls from its last high point. IWM’s worst fall was −58.6%, from July 13, 2007 to March 9, 2009. It got back to that high on February 8, 2011.
VB’s worst fall was −59.6%, from July 13, 2007 to March 9, 2009. It got back to that high on December 20, 2010.
Their daily moves had a correlation of 0.98. A correlation of 1 means two funds always move up and down together. Near 0 means they move on their own. So holding both adds little variety.
Why people choose IWM or VB#
IWM. Traders often pick IWM, and many use the Russell 2000 as the main measure of small companies.
VB. Long-term investors often pick VB for its low fee and somewhat larger companies.
Strategies that hold IWM or VB#
These classic strategies hold one or both at least some of the time. Each is a set of written rules you can open, test and copy.
- Hybrid Asset Allocation (HAA), by Wouter Keller and JW Keuning, 2023 (holds IWM)
- Bold Asset Allocation (BAA), by Wouter Keller, 2022 (holds IWM)
- Defensive Asset Allocation (DAA), by Wouter Keller and JW Keuning, 2018 (holds IWM)
- Protective Asset Allocation (PAA), by Wouter Keller and JW Keuning, 2016 (holds IWM)
- Vigilant Asset Allocation G12 (VAA-G12), by Wouter Keller and JW Keuning, 2017 (holds IWM)
- GTAA 13: Faber’s 13-asset tactical allocation, by Mebane Faber, 2013 (holds IWM)
- GTAA Aggressive 3 (Faber GTAA AGG3), by Mebane Faber, 2013 (holds IWM)
- GTAA Aggressive 6 (Faber GTAA AGG6), by Mebane Faber, 2013 (holds IWM)
- US Risk Parity Trend-Following (The Trend is Our Friend), by Andrew Clare, James Seaton, Peter N. Smith, and Stephen Thomas, 2016 (holds IWM)
Other funds like IWM and VB#
Each fund has more funds that hold the same kind of investments, ranked by how closely they move with it: IWM alternatives and VB alternatives.
Test a mix of IWM and VB#
Open the builder, add IWM and VB, and give each a weight, such as 50% and 50%. The backtest shows how the mix would have done, with its worst drop, on daily prices. You can also add a rule, for example to switch between them, and compare. Read the full pages for IWM and VB, or see more ETF comparisons.
The details#
Both funds use Tactfolio’s stored daily prices, adjusted for splits, with dividends reinvested. They are compared only on days both traded, starting the later fund’s first day, so neither gets a head start. Correlation uses daily returns over the same days. Read what a backtest simulates for more on these measures.
Common questions#
Is VB a Russell 2000 fund?#
No. VB follows the Morningstar US Small Cap Index. It holds many of the same companies as the Russell 2000, but not all, and they are a bit larger on average.
Why is IWM’s fee higher than VB’s?#
Funds price themselves differently, and many of IWM’s buyers are traders who care most about how much trades each day. The fee line above shows both, and the date we checked them.
Which is cheaper, IWM or VB?#
VB costs less: 0.03% a year against 0.19%. Fees come from each issuer and were checked on October 16, 2026.
Which did better, IWM or VB?#
From January 2004 to October 2026, IWM returned about 8.5% a year and VB returned about 9.7% a year, with dividends reinvested. Their worst drops were −58.6% and −59.6%. Past returns do not tell you what comes next.