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Is Vident Core U.S. Equity ETF (VUSE) a Strong ETF Right Now?

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Launched on 01/22/2014, the Vident Core U.S. Equity ETF (VUSE - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - All Cap Value category of the market.

What Are Smart Beta ETFs?

Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.

Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.

However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.

This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.

This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.

Fund Sponsor & Index

The fund is managed by Vident Financial, and has been able to amass over $420.15 million, which makes it one of the larger ETFs in the Style Box - All Cap Value. This particular fund, before fees and expenses, seeks to match the performance of the Vident Core U.S. Equity Fund Index.

The Vident Core U.S. Equity Fund Index represents a portfolio of US companies that adhere to higher standards of corporate governance and accounting, as measured by numerous research metrics.

Cost & Other Expenses

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.

Operating expenses on an annual basis are 0.48% for VUSE, making it on par with most peer products in the space.

It's 12-month trailing dividend yield comes in at 1.07%.

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.

Representing 19.20% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Consumer Discretionary and Financials round out the top three.

Looking at individual holdings, Ovintiv Inc (OVV - Free Report) accounts for about 0.86% of total assets, followed by Abercrombie & Fitch Co (ANF - Free Report) and Dillards Inc (DDS - Free Report) .

VUSE's top 10 holdings account for about 7.66% of its total assets under management.

Performance and Risk

The ETF return is roughly 27.35% so far this year and it's up approximately 48.66% in the last one year (as of 09/17/2021). In the past 52-week period, it has traded between $27.93 and $45.76.

The fund has a beta of 1.26 and standard deviation of 27.54% for the trailing three-year period, which makes VUSE a medium risk choice in this particular space. With about 227 holdings, it effectively diversifies company-specific risk.


Vident Core U.S. Equity ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.

Dimensional U.S. Targeted Value ETF (DFAT - Free Report) tracks ---------------------------------------- and the iShares Core S&P U.S. Value ETF (IUSV - Free Report) tracks S&P 900 Value Index. Dimensional U.S. Targeted Value ETF has $6.03 billion in assets, iShares Core S&P U.S. Value ETF has $10.58 billion. DFAT has an expense ratio of 0.34% and IUSV charges 0.04%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - All Cap Value.

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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