Singapore markets closed
  • Straits Times Index

    3,276.36
    +36.30 (+1.12%)
     
  • S&P 500

    3,973.32
    +9.38 (+0.24%)
     
  • Dow

    33,898.16
    +48.70 (+0.14%)
     
  • Nasdaq

    11,075.10
    +25.60 (+0.23%)
     
  • BTC-USD

    16,435.23
    +277.63 (+1.72%)
     
  • CMC Crypto 200

    388.46
    -0.27 (-0.07%)
     
  • FTSE 100

    7,534.77
    +60.75 (+0.81%)
     
  • Gold

    1,755.50
    +15.20 (+0.87%)
     
  • Crude Oil

    79.33
    +2.09 (+2.71%)
     
  • 10-Yr Bond

    3.7220
    +0.0190 (+0.51%)
     
  • Nikkei

    28,027.84
    -134.99 (-0.48%)
     
  • Hang Seng

    18,204.68
    +906.74 (+5.24%)
     
  • FTSE Bursa Malaysia

    1,476.96
    -9.58 (-0.64%)
     
  • Jakarta Composite Index

    7,012.07
    -5.29 (-0.08%)
     
  • PSE Index

    6,780.78
    +99.31 (+1.49%)
     

Should Vanguard Value ETF (VTV) Be on Your Investing Radar?

Looking for broad exposure to the Large Cap Value segment of the US equity market? You should consider the Vanguard Value ETF (VTV), a passively managed exchange traded fund launched on 01/26/2004.

The fund is sponsored by Vanguard. It has amassed assets over $92.02 billion, making it the largest ETFs attempting to match the Large Cap Value segment of the US equity market.

Why Large Cap Value

Companies that fall in the large cap category tend to have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.

While 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

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

Annual operating expenses for this ETF are 0.04%, making it the least expensive products in the space.

It has a 12-month trailing dividend yield of 2.67%.

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 22.50% of the portfolio. Financials and Industrials round out the top three.

Looking at individual holdings, Berkshire Hathaway Inc. (BRK.B) accounts for about 3.07% of total assets, followed by Unitedhealth Group Inc. (UNH) and Johnson & Johnson (JNJ).

The top 10 holdings account for about 21.76% of total assets under management.

Performance and Risk

VTV seeks to match the performance of the CRSP U.S. Large Cap Value Index before fees and expenses. The CRSP U.S. Large Cap Value Index measures the investment return of large-capitalization value stocks.

The ETF has lost about -12.36% so far this year and is down about -4.88% in the last one year (as of 09/29/2022). In the past 52-week period, it has traded between $124.40 and $150.80.

The ETF has a beta of 0.90 and standard deviation of 23.60% for the trailing three-year period, making it a medium risk choice in the space. With about 346 holdings, it effectively diversifies company-specific risk.

Alternatives

Vanguard 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, VTV is an outstanding 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 Vanguard High Dividend Yield ETF (VYM) and the iShares Russell 1000 Value ETF (IWD) track a similar index. While Vanguard High Dividend Yield ETF has $43.42 billion in assets, iShares Russell 1000 Value ETF has $48.49 billion. VYM has an expense ratio of 0.06% and IWD charges 0.18%.

Bottom-Line

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also 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.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Vanguard Value ETF (VTV): ETF Research Reports
 
UnitedHealth Group Incorporated (UNH) : Free Stock Analysis Report
 
Johnson & Johnson (JNJ) : Free Stock Analysis Report
 
Berkshire Hathaway Inc. (BRK.B) : Free Stock Analysis Report
 
Vanguard High Dividend Yield ETF (VYM): ETF Research Reports
 
iShares Russell 1000 Value ETF (IWD): ETF Research Reports
 
To read this article on Zacks.com click here.
 
Zacks Investment Research