Yahoo Finance Should Vanguard Mega Cap Value ETF (MGV) Be on Your Investing Radar?
Launched on 12/17/2007, the Vanguard Mega Cap Value ETF (MGV) is a passively managed exchange traded fund designed to provide a broad exposure to the Large Cap Value segment of the US equity market.
The fund is sponsored by Vanguard. It has amassed assets over $6.07 billion, making it one of the larger ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Companies that find themselves in the large cap category typically have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.
Value stocks have lower than average price-to-earnings and price-to-book ratios. They also have lower than average sales and earnings growth rates. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. They are however likely to underperform growth stocks in strong bull markets.
Costs
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.07%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 2.49%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Healthcare sector--about 21% of the portfolio. Financials and Industrials round out the top three.
Looking at individual holdings, Berkshire Hathaway Inc. (BRK.B) accounts for about 3.68% of total assets, followed by Unitedhealth Group Inc. (UNH) and Exxon Mobil Corp. (XOM).
The top 10 holdings account for about 27.65% of total assets under management.
Performance and Risk
MGV seeks to match the performance of the CRSP U.S. Mega Cap Value Index before fees and expenses. The CRSP U.S. Mega Cap Value Index is a float-adjusted, market-capitalization-weighted index designed to measure equity market performance of mega-capitalization value stocks in the United States.
The ETF has gained about 3.90% so far this year and is up about 11.65% in the last one year (as of 09/19/2023). In the past 52-week period, it has traded between $89.91 and $107.46.
The ETF has a beta of 0.86 and standard deviation of 14.94% for the trailing three-year period, making it a medium risk choice in the space. With about 143 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard Mega Cap Value ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, MGV is a great option for investors seeking exposure to the Style Box - Large Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Russell 1000 Value ETF (IWD) and the Vanguard Value ETF (VTV) track a similar index. While iShares Russell 1000 Value ETF has $50.54 billion in assets, Vanguard Value ETF has $101.60 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.
Bottom-Line
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Vanguard Mega Cap Value ETF (MGV): ETF Research Reports
UnitedHealth Group Incorporated (UNH) : Free Stock Analysis Report
Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
Berkshire Hathaway Inc. (BRK.B) : Free Stock Analysis Report
Vanguard Value ETF (VTV): ETF Research Reports
iShares Russell 1000 Value ETF (IWD): ETF Research Reports
