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Should You Invest in the Vanguard Energy ETF (VDE)?
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Designed to provide broad exposure to the Energy - Broad segment of the equity market, the Vanguard Energy ETF (VDE - Free Report) is a passively managed exchange traded fund launched on 09/23/2004.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Energy - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 12, placing it in bottom 25%.
Index Details
The fund is sponsored by Vanguard. It has amassed assets over $8.59 billion, making it one of the largest ETFs attempting to match the performance of the Energy - Broad segment of the equity market. VDE seeks to match the performance of the MSCI US Investable Market Energy 25/50 Index before fees and expenses.
The MSCI US Investable Market Index (IMI)/Energy 25/50 is made up of stocks of large, mid-size, and small U.S. companies within the energy sector.
Costs
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.10%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 3.67%.
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 in the Energy sector--about 100% of the portfolio.
Looking at individual holdings, Exxon Mobil Corp. (XOM - Free Report) accounts for about 22.35% of total assets, followed by Chevron Corp. (CVX - Free Report) and Conocophillips (COP - Free Report) .
The top 10 holdings account for about 67.33% of total assets under management.
Performance and Risk
The ETF has lost about -0.53% so far this year and is up roughly 48.04% in the last one year (as of 01/09/2023). In that past 52-week period, it has traded between $85.24 and $131.88.
The ETF has a beta of 1.40 and standard deviation of 43.92% for the trailing three-year period, making it a high risk choice in the space. With about 109 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard Energy 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, VDE is a great option for investors seeking exposure to the Energy ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
IShares U.S. Energy ETF (IYE - Free Report) tracks Dow Jones U.S. Oil & Gas Index and the Energy Select Sector SPDR ETF (XLE - Free Report) tracks Energy Select Sector Index. IShares U.S. Energy ETF has $2.25 billion in assets, Energy Select Sector SPDR ETF has $40.85 billion. IYE has an expense ratio of 0.39% and XLE charges 0.10%.
Bottom Line
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 You Invest in the Vanguard Energy ETF (VDE)?
Designed to provide broad exposure to the Energy - Broad segment of the equity market, the Vanguard Energy ETF (VDE - Free Report) is a passively managed exchange traded fund launched on 09/23/2004.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Energy - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 12, placing it in bottom 25%.
Index Details
The fund is sponsored by Vanguard. It has amassed assets over $8.59 billion, making it one of the largest ETFs attempting to match the performance of the Energy - Broad segment of the equity market. VDE seeks to match the performance of the MSCI US Investable Market Energy 25/50 Index before fees and expenses.
The MSCI US Investable Market Index (IMI)/Energy 25/50 is made up of stocks of large, mid-size, and small U.S. companies within the energy sector.
Costs
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.10%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 3.67%.
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 in the Energy sector--about 100% of the portfolio.
Looking at individual holdings, Exxon Mobil Corp. (XOM - Free Report) accounts for about 22.35% of total assets, followed by Chevron Corp. (CVX - Free Report) and Conocophillips (COP - Free Report) .
The top 10 holdings account for about 67.33% of total assets under management.
Performance and Risk
The ETF has lost about -0.53% so far this year and is up roughly 48.04% in the last one year (as of 01/09/2023). In that past 52-week period, it has traded between $85.24 and $131.88.
The ETF has a beta of 1.40 and standard deviation of 43.92% for the trailing three-year period, making it a high risk choice in the space. With about 109 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard Energy 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, VDE is a great option for investors seeking exposure to the Energy ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
IShares U.S. Energy ETF (IYE - Free Report) tracks Dow Jones U.S. Oil & Gas Index and the Energy Select Sector SPDR ETF (XLE - Free Report) tracks Energy Select Sector Index. IShares U.S. Energy ETF has $2.25 billion in assets, Energy Select Sector SPDR ETF has $40.85 billion. IYE has an expense ratio of 0.39% and XLE charges 0.10%.
Bottom Line
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.