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Should Vanguard SmallCap Value ETF (VBR) Be on Your Investing Radar?
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Launched on 01/26/2004, the Vanguard SmallCap Value ETF (VBR - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Small Cap Value segment of the US equity market.
The fund is sponsored by Vanguard. It has amassed assets over $24.24 billion, making it the largest ETFs attempting to match the Small Cap Value segment of the US equity market.
Why Small Cap Value
Small cap companies have market capitalization below $2 billion. They usually have higher potential than large and mid cap companies with stocks but higher risk.
Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. Considering long-term performance, value stocks have outperformed growth stocks in almost all markets; however, they are more likely to underperform growth stocks in strong bull markets.
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 1.92%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, Diamondback Energy Inc. (FANG - Free Report) accounts for about 0.75% of total assets, followed by Signature Bank/new York Ny (SBNY - Free Report) and Vici Properties Inc. (VICI - Free Report) .
Performance and Risk
VBR seeks to match the performance of the CRSP U.S. Small Cap Value Index before fees and expenses. The CRSP U.S. Small Cap Value Index measures the investment return of small-capitalization value stocks.
The ETF has lost about -9.50% so far this year and is down about -3.60% in the last one year (as of 05/26/2022). In the past 52-week period, it has traded between $156.07 and $185.72.
The ETF has a beta of 1.15 and standard deviation of 29.60% for the trailing three-year period, making it a medium risk choice in the space. With about 995 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard SmallCap Value 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, VBR is an excellent option for investors seeking exposure to the Style Box - Small Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares S&P SmallCap 600 Value ETF (IJS - Free Report) and the iShares Russell 2000 Value ETF (IWN - Free Report) track a similar index. While iShares S&P SmallCap 600 Value ETF has $8.37 billion in assets, iShares Russell 2000 Value ETF has $12.24 billion. IJS has an expense ratio of 0.18% and IWN charges 0.24%.
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 SmallCap Value ETF (VBR) Be on Your Investing Radar?
Launched on 01/26/2004, the Vanguard SmallCap Value ETF (VBR - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Small Cap Value segment of the US equity market.
The fund is sponsored by Vanguard. It has amassed assets over $24.24 billion, making it the largest ETFs attempting to match the Small Cap Value segment of the US equity market.
Why Small Cap Value
Small cap companies have market capitalization below $2 billion. They usually have higher potential than large and mid cap companies with stocks but higher risk.
Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. Considering long-term performance, value stocks have outperformed growth stocks in almost all markets; however, they are more likely to underperform growth stocks in strong bull markets.
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 1.92%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, Diamondback Energy Inc. (FANG - Free Report) accounts for about 0.75% of total assets, followed by Signature Bank/new York Ny (SBNY - Free Report) and Vici Properties Inc. (VICI - Free Report) .
Performance and Risk
VBR seeks to match the performance of the CRSP U.S. Small Cap Value Index before fees and expenses. The CRSP U.S. Small Cap Value Index measures the investment return of small-capitalization value stocks.
The ETF has lost about -9.50% so far this year and is down about -3.60% in the last one year (as of 05/26/2022). In the past 52-week period, it has traded between $156.07 and $185.72.
The ETF has a beta of 1.15 and standard deviation of 29.60% for the trailing three-year period, making it a medium risk choice in the space. With about 995 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard SmallCap Value 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, VBR is an excellent option for investors seeking exposure to the Style Box - Small Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares S&P SmallCap 600 Value ETF (IJS - Free Report) and the iShares Russell 2000 Value ETF (IWN - Free Report) track a similar index. While iShares S&P SmallCap 600 Value ETF has $8.37 billion in assets, iShares Russell 2000 Value ETF has $12.24 billion. IJS has an expense ratio of 0.18% and IWN charges 0.24%.
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.