3 ETFs for a Small-Cap Revival

Zachary Evens: Small-cap stocks have spent the last few years in the market’s shadow, but 2026 could shape up to be a different story. With interest rates falling, economic growth broadening, and valuations for smaller companies still sitting at attractive levels, investors are starting to rediscover the appeal of small-cap stocks. While small-cap indexes have lagged large-cap indexes for a long time, they’ve actually outperformed in the last six months, and Morningstar’s 2026 Outlook suggests that trend might continue.

That doesn’t mean investors should blindly buy any small-cap ETF. There are several risks unique to small caps, and the best long-term ETFs keep costs low, diversify across hundreds of holdings, and follow disciplined, repeatable strategies. The three ETFs highlighted here check all those boxes. They offer broad exposure to small companies, each with its own unique angle, and all with fees that won’t drag down returns.

For investors looking to position their portfolios for a potential small-cap revival, these three great ETFs deserve a close look.

3 ETFs for a Small-Cap Revival

1. Vanguard Small-Cap Index Fund ETF Shares VB
2. Avantis US Small Cap Equity ETF AVSC
3. Schwab International Small-Cap Equity ETF SCHC

First up is Vanguard’s Small-Cap Index ETF, which trades under the ticker VB. It charges just 5 basis points annually and sits in the small-blend category. It is one of the most cost-effective ways to gain exposure to small US companies and earns a Gold Morningstar Medalist Rating.

This ETF tracks the CRSP US Small Cap Index, which is a broad benchmark that spans more than 1,300 companies and includes slightly larger stocks than some peers. That breadth is a major advantage, and its slightly larger orientation also controls risk. No single company or industry dominates the portfolio, and the fund captures the full spectrum of small-cap opportunities.

Its market-cap-weighted approach keeps turnover low and ensures the fund naturally tilts toward the best performing stocks and sectors. For investors who want a simple, reliable, and extremely diversified way to participate in a small-cap rebound, VB is a standout option.

Next up is Avantis US Small Cap Equity ETF, ticker AVSC. It charges 25 basis points annually and sits in the small-value category.

Avantis has built a strong reputation for blending academic research with practical portfolio construction, and this ETF is a great example of that philosophy. Instead of simply tracking an index, AVSC uses a rules-based approach that emphasizes companies with strong profitability and attractive valuations. This gives the fund a subtle but meaningful tilt toward higher-quality small caps. In a volatile segment, this is an important distinction that supports a Morningstar Medalist Rating of Silver.

The portfolio holds several hundred stocks, which keeps concentration risk low. Its factor-driven strategy aims to capture the historical outperformance of the value and profitability factors, while still maintaining broad diversification. For investors who want a more intentional, factor-based approach to small-cap investing, AVSC is a great choice.

Last but not least is Schwab International Small-Cap Equity ETF, ticker SCHC. It charges just 8 basis points annually and also earns a Silver Morningstar Medalist Rating. Small-cap strength isn’t just a US story. International small-cap valuations also look attractive, potentially making this ETF a sound complement to a domestic small-cap allocation.

SCHC tracks the FTSE Developed Small Cap ex US Index, giving investors exposure to more than 2,000 companies across Europe, Asia, and other developed markets. Broad diversification also helps smooth out the volatility that can come with investing overseas.

International small caps tend to be more closely tied to local economic conditions, so when global growth accelerates, this segment can deliver strong performance. SCHC offers a simple way to tap into that potential.

A small-cap revival won’t happen overnight, but if and when it does, any of these three ETFs offer a low-cost path to capturing that next wave of small-cap growth.

Watch 3 Great International ETFs for 2026 and Beyond for more from Zachary Evens.