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Should Vanguard MidCap Growth ETF (VOT) Be on Your Investing Radar?
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Designed to provide broad exposure to the Mid Cap Growth segment of the US equity market, the Vanguard MidCap Growth ETF (VOT - Free Report) is a passively managed exchange traded fund launched on 08/17/2006.
The fund is sponsored by Vanguard. It has amassed assets over $9 billion, making it one of the largest ETFs attempting to match the Mid Cap Growth segment of the US equity market.
Why Mid Cap Growth
With market capitalization between $2 billion and $10 billion, mid cap companies usually contain higher growth prospects than large cap companies, and are considered less risky than their small cap counterparts. These types of companies, then, have a good balance of stability and growth potential.
While growth stocks do boast higher than average sales and earnings growth rates, and they are expected to grow faster than the wider market, investors should note these kinds of stocks have higher valuations. Further, growth stocks have a higher level of volatility associated with them. Even though growth stocks are more likely to outperform their value counterparts in strong bull markets, value stocks have a record of delivering better returns in almost all markets than growth stocks.
Costs
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
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 0.56%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, Palo Alto Networks Inc. (PANW - Free Report) accounts for about 1.44% of total assets, followed by Pioneer Natural Resources Co. (PXD - Free Report) and Xilinx Inc. .
The top 10 holdings account for about 12.37% of total assets under management.
Performance and Risk
VOT seeks to match the performance of the CRSP U.S. Mid Cap Growth Index before fees and expenses. The CRSP U.S. Mid Cap Growth Index measures the investment return of mid-capitalization growth stocks.
The ETF has lost about -29.60% so far this year and is down about -18.08% in the last one year (as of 05/12/2022). In the past 52-week period, it has traded between $176.65 and $265.79.
The ETF has a beta of 1.10 and standard deviation of 26.47% for the trailing three-year period, making it a medium risk choice in the space. With about 181 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard MidCap Growth ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, VOT is an outstanding option for investors seeking exposure to the Style Box - Mid Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares S&P MidCap 400 Growth ETF (IJK - Free Report) and the iShares Russell MidCap Growth ETF (IWP - Free Report) track a similar index. While iShares S&P MidCap 400 Growth ETF has $6.43 billion in assets, iShares Russell MidCap Growth ETF has $10.64 billion. IJK has an expense ratio of 0.17% and IWP charges 0.23%.
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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Should Vanguard MidCap Growth ETF (VOT) Be on Your Investing Radar?
Designed to provide broad exposure to the Mid Cap Growth segment of the US equity market, the Vanguard MidCap Growth ETF (VOT - Free Report) is a passively managed exchange traded fund launched on 08/17/2006.
The fund is sponsored by Vanguard. It has amassed assets over $9 billion, making it one of the largest ETFs attempting to match the Mid Cap Growth segment of the US equity market.
Why Mid Cap Growth
With market capitalization between $2 billion and $10 billion, mid cap companies usually contain higher growth prospects than large cap companies, and are considered less risky than their small cap counterparts. These types of companies, then, have a good balance of stability and growth potential.
While growth stocks do boast higher than average sales and earnings growth rates, and they are expected to grow faster than the wider market, investors should note these kinds of stocks have higher valuations. Further, growth stocks have a higher level of volatility associated with them. Even though growth stocks are more likely to outperform their value counterparts in strong bull markets, value stocks have a record of delivering better returns in almost all markets than growth stocks.
Costs
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
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 0.56%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, Palo Alto Networks Inc. (PANW - Free Report) accounts for about 1.44% of total assets, followed by Pioneer Natural Resources Co. (PXD - Free Report) and Xilinx Inc. .
The top 10 holdings account for about 12.37% of total assets under management.
Performance and Risk
VOT seeks to match the performance of the CRSP U.S. Mid Cap Growth Index before fees and expenses. The CRSP U.S. Mid Cap Growth Index measures the investment return of mid-capitalization growth stocks.
The ETF has lost about -29.60% so far this year and is down about -18.08% in the last one year (as of 05/12/2022). In the past 52-week period, it has traded between $176.65 and $265.79.
The ETF has a beta of 1.10 and standard deviation of 26.47% for the trailing three-year period, making it a medium risk choice in the space. With about 181 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard MidCap Growth ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, VOT is an outstanding option for investors seeking exposure to the Style Box - Mid Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares S&P MidCap 400 Growth ETF (IJK - Free Report) and the iShares Russell MidCap Growth ETF (IWP - Free Report) track a similar index. While iShares S&P MidCap 400 Growth ETF has $6.43 billion in assets, iShares Russell MidCap Growth ETF has $10.64 billion. IJK has an expense ratio of 0.17% and IWP charges 0.23%.
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.