Vanguard Small-Cap Value ETF Shows Strong 2026 Gains as Value Investing Gains Traction

Small-cap stocks have outperformed the S&P 500 in early 2026, delivering the widest margin in over two decades. The Vanguard Small‑Cap Value ETF, which holds 835 companies with a median market cap of about $10 billion, is up roughly 13 % so far this year. The fund favours industrials, financials and consumer discretionary firms such as NRG Energy, Williams‑Sonoma and Alcoa, while largely avoiding technology.

Analysts note that the recent rally reflects a broader re‑evaluation of value investing, which has been eclipsed by the “Magnificent Seven” mega‑cap tech names. While growth stocks benefited from low‑interest rates and the AI boom, many of them—especially mid‑tier growth names—have struggled as rates rise. Value‑oriented investors argue that overlooked companies with solid fundamentals and modest valuations can deliver higher returns, citing examples like Texas Pacific Land Corp and Axon Enterprise that posted outsized gains.

The shift suggests that investors may be diversifying away from a narrow set of high‑profile growth stocks toward broader, undervalued segments of the market.