Reinforce US equity breadth with size and style ETFs
New US equity ETFs give investors precise control over size and style exposures to address concentration risk and strengthen portfolio construction.
- Moving beyond large-cap indices to access mid- and small-cap segments can broaden US equity exposure and reduce concentration risk.
- Growth and value ETFs enable more deliberate positioning by isolating fundamental style drivers within US equities.
- A consistent Russell index framework supports modular, low-cost portfolio construction across size and style dimensions.
Concentration in US equity markets has become a defining feature in recent years. The challenge for investors is not whether to hold these dominant companies, but how to complement them by accessing the broader opportunity set across the market.
Exposure to US equities still relies heavily on large-cap benchmarks. While these remain core building blocks, they capture only part of the investable universe, which extends into mid-sized companies and a long tail of smaller firms.
Against this backdrop, the case for more granular exposure – by both size and style – has strengthened. Our new ETFs aim to enable more precise and flexible portfolio construction across the US equity spectrum.
A more complete picture of US equities
The new ETFs span four distinct exposures – small-cap, mid-cap, growth and value – with each aligned to a specific segment of the Russell index framework:
The US equity market can be broken down into complementary components that behave differently and serve distinct roles in a portfolio. The Russell 2000 Index focuses on smaller companies, offering exposure to stocks that are often more domestically oriented and sensitive to economic cycles.
The Russell Mid Cap Index sits between large- and small-caps, acting as a “completion” exposure that helps reduce reliance on mega-caps. This segment provides a more balanced profile, combining elements of both growth and value while reducing reliance on the largest companies.
Alongside size, the Russell 1000 Growth Index and Russell 1000 Value Index isolate style exposures within the large- and mid-cap universe. Growth focuses on companies with stronger earnings expectations, while value targets firms trading at lower valuations and more cyclical sectors.
Taken together, these four exposures form a coherent set of building blocks. Investors can use them to construct more tailored US equity allocations – whether that means complementing an existing large-cap core exposure by diversifying into smaller companies or expressing a specific style view.
Size vs. style: Different tools, different outcomes
Style exposures provide a distinct dimension of portfolio construction. Growth and value are both drawn from the same large- and mid-cap universe but differ meaningfully in how weight is distributed across industries and companies.
Importantly, these are not simply mirror images. Growth indices tend to be more concentrated, with performance often driven by a relatively small number of industry leaders – particularly within technology and communications. Value indices, by contrast, are typically more diversified across sectors such as financials, energy and industrials.
As the chart below highlights, there are important differences in sector concentration for style versus size exposures. In growth, a small number of dominant industries and companies can account for a significant share of index weight. In contrast, size-based exposures – mid- and small-caps in particular – distribute weight more broadly and more evenly across a wider set of industries and companies.
Consider the Russell 2000 Index. Its largest constituent, HUT 8 Corporation1, has a weighting of just 0.40%, limiting its influence on total market return. By comparison, NVIDIA represents around 14% of the Russell 1000 Growth Index, giving it far greater potential impact on index performance2.
This distinction is critical for portfolio construction. While size exposures expand breadth through a larger number of holdings, style exposures shape how that exposure is concentrated – offering investors different ways to balance diversification and leadership risk.
Sector leadership separates style from size
Cumulative weight by industry (%)
Source: FTSE Russell, Vanguard, based on June 2026 reconstitution files for Russell US indices.
Addressing concentration risk through a modular approach
One of the most compelling use cases for combining size and style exposures is managing concentration risk. And rather than viewing these exposures in isolation, their real power lies in combination. A modular approach allows portfolios to be tailored based on objectives.
In growth indices, a small number of mega-cap stocks can account for a significant share of total index weight, meaning performance is heavily influenced by a limited set of companies.
By contrast:
- Mid-caps dilute the influence of mega-caps while retaining exposure to established companies. They can be used as a completion exposure between large and small companies.
- Small-caps offer broad diversification across hundreds of companies, providing access to domestic growth and diversification.
- Value rebalances sector composition away from technology towards more cyclical areas. Value exposures (and growth) allow investors to express a view on fundamentals or balance style risk.
Used together, these building blocks can help portfolio constructors restore breadth to US equity allocations – moving from a concentrated core to a more diversified structure.
Cost, implementation and portfolio implications
Low-cost implementation remains central to the investment case. Our new ETFs are competitively priced, and given the liquidity of US equities, trading costs are typically low – supporting both entry and switching.
This enables investors to refine their US equity exposure without materially increasing costs. As a result, portfolios can move beyond concentrated large-cap allocations towards a more balanced mix across size and style.
The shift towards more targeted exposures reflects a broader evolution in portfolio construction: from broad benchmarks to more precise, modular allocations. In this context, having the right building blocks matters.
1 HUT 8 Corporation is a vertically integrated operator of large-scale energy infrastructure and bitcoin miners.
2 Source: FTSE Russell, Vanguard, weightings are based on the June 2026 reconstitution files for Russell US indices.
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