Retirees Should Look At This Small Cap ETF, It Doubled Russell 2000 Returns Using One Simple Screen

"Small-cap stocks have outpaced large-caps in early 2026, and Vanguard S&P Small-Cap 600 Index Fund ETF Shares ( NYSEARCA:VIOO) sits at the center of this rotation. With year-to-date gains of 8.88% through February 13, 2026, VIOO delivers pure, low-cost exposure to profitable U.S. small-cap companies. But this ETF works best for investors who understand small-cap cyclicality and can tolerate volatility for long-term growth."

"VIOO tracks the S&P SmallCap 600 Index, which requires profitability for inclusion - a key differentiator from the Russell 2000. This quality screen eliminates unprofitable companies and concentrates the portfolio in businesses with proven earnings power. The fund's sector composition reflects this focus, with Financials and Industrials representing over one-third of holdings. These cyclical sectors thrive during economic expansions, positioning VIOO to capture domestic growth momentum."

"Vanguard's execution keeps costs minimal, with an expense ratio of just 0.07% annually. This low-cost structure ensures investors capture nearly all of the index's returns rather than paying them away in fees. The fund maintains a buy-and-hold discipline with 22% turnover, rebalancing when necessary without excessive trading costs. While the 1.59% dividend yield provides some income, VIOO is fundamentally a capital appreciation vehicle designed for long-term growth."

VIOO provides low-cost exposure to profitable U.S. small-cap companies, gaining 8.88% year-to-date through February 13, 2026. The ETF tracks the S&P SmallCap 600 Index, which requires profitability for inclusion and excludes unprofitable firms, concentrating holdings in proven-earning businesses. Financials and Industrials comprise over one-third of the portfolio, making the fund sensitive to economic cycles and positioned to benefit from domestic growth. The macro environment showed GDP expansion of 4.4% as of July 1, 2025, supporting cyclical small-cap strength. Vanguard keeps costs at a 0.07% expense ratio with 22% turnover and a 1.59% dividend yield, favoring long-term capital appreciation. VIOO has typically outperformed the Russell 2000 over multi-year periods, though short-term results can vary.

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