If you're interested in broad exposure to the Large Cap Value segment of the US equity market, look no further than the Vanguard Value ETF (
VTV Quick Quote VTV - Free Report) , a passively managed exchange traded fund launched on 01/26/2004.
The fund is sponsored by Vanguard. It has amassed assets over $97.50 billion, making it the largest ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Companies that fall in the large cap category tend to have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows 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. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.
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 0.04%, making it the least expensive products in the space.
It has a 12-month trailing dividend yield of 2.32%.
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.
Looking at individual holdings, Berkshire Hathaway Inc. Accounts for about 3.01% of total assets, followed by Johnson & Johnson (
JNJ Quick Quote JNJ - Free Report) and Unitedhealth Group Inc. ( UNH Quick Quote UNH - Free Report) . Performance and Risk
VTV seeks to match the performance of the CRSP U.S. Large Cap Value Index before fees and expenses. The CRSP U.S. Large Cap Value Index measures the investment return of large-capitalization value stocks.
The ETF has lost about -5% so far this year and it's up approximately 2.49% in the last one year (as of 05/24/2022). In the past 52-week period, it has traded between $134.50 and $150.80.
The ETF has a beta of 0.92 and standard deviation of 23.14% for the trailing three-year period, making it a medium risk choice in the space. With about 351 holdings, it effectively diversifies company-specific risk.
Vanguard Value 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, VTV is an excellent 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 Vanguard High Dividend Yield ETF (
VYM Quick Quote VYM - Free Report) and the iShares Russell 1000 Value ETF ( IWD Quick Quote IWD - Free Report) track a similar index. While Vanguard High Dividend Yield ETF has $43.84 billion in assets, iShares Russell 1000 Value ETF has $53.66 billion. VYM has an expense ratio of 0.06% and IWD charges 0.19%. Bottom-Line
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also 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.