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

Zacks Equity Research
·4-min read

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 $92.32 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 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.

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Value stocks are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their lower than average sales and earnings growth rates. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.

Costs

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.

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 2.16%.

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 Financials sector--about 22.40% of the portfolio. Healthcare and Industrials round out the top three.

Looking at individual holdings, Jpmorgan Chase & Co. (JPM) accounts for about 2.90% of total assets, followed by Berkshire Hathaway Inc. (BRK.B) and Johnson & Johnson (JNJ).

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 -0.84% so far this year and it's up approximately 21.80% in the last one year (as of 01/20/2022). In the past 52-week period, it has traded between $118.02 and $150.33.

The ETF has a beta of 0.98 and standard deviation of 22.55% for the trailing three-year period, making it a medium risk choice in the space. With about 358 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 excellent 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 $42.70 billion in assets, iShares Russell 1000 Value ETF has $58.40 billion. VYM has an expense ratio of 0.06% and IWD charges 0.19%.

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.


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
 
JPMorgan Chase & Co. (JPM) : 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
 
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Zacks Investment Research