If you're interested in broad exposure to the Large Cap Value segment of the US equity market, look no further than the iShares MSCI USA Value Factor ETF (
VLUE Quick Quote VLUE - Free Report) , a passively managed exchange traded fund launched on 04/16/2013.
The fund is sponsored by Blackrock. It has amassed assets over $15.63 billion, making it one of the larger 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. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.
While value stocks have lower than average price-to-earnings and price-to-book ratios, they also have lower than average sales and earnings growth rates. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. They are however likely to underperform growth stocks in strong bull markets.
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 0.15%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 2.13%.
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 Information Technology sector--about 25.60% of the portfolio. Consumer Discretionary and Healthcare round out the top three.
Looking at individual holdings, At&t Inc (
T Quick Quote T - Free Report) accounts for about 7.30% of total assets, followed by Intel Corporation Corp ( INTC Quick Quote INTC - Free Report) and General Motors ( GM Quick Quote GM - Free Report) .
The top 10 holdings account for about 34.62% of total assets under management.
Performance and Risk
VLUE seeks to match the performance of the MSCI USA Enhanced Value Index before fees and expenses. The MSCI USA Enhanced Value Index is based on a traditional market capitalization-weighted parent index, the MSCI USA Index which includes U.S. large and mid capitalization stocks.
The ETF has gained about 23.56% so far this year and it's up approximately 43.68% in the last one year (as of 11/03/2021). In the past 52-week period, it has traded between $75.99 and $108.72.
The ETF has a beta of 1.08 and standard deviation of 26.19% for the trailing three-year period, making it a medium risk choice in the space. With about 155 holdings, it effectively diversifies company-specific risk.
IShares MSCI USA Value Factor 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, VLUE is a great 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 iShares Russell 1000 Value ETF (
IWD Quick Quote IWD - Free Report) and the Vanguard Value ETF ( VTV Quick Quote VTV - Free Report) track a similar index. While iShares Russell 1000 Value ETF has $57.32 billion in assets, Vanguard Value ETF has $87.92 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%. Bottom-Line
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.
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.