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Should You Invest in the Vanguard Energy ETF (VDE)?
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Launched on 09/23/2004, the Vanguard Energy ETF (VDE - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Energy - Broad segment of the equity market.
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.
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 1, placing it in top 6%.
Index Details
The fund is sponsored by Vanguard. It has amassed assets over $7.78 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
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 0.10%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 3.30%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many 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 20.26% of total assets, followed by Chevron Corp. (CVX - Free Report) and Conocophillips (COP - Free Report) .
The top 10 holdings account for about 66.47% of total assets under management.
Performance and Risk
Year-to-date, the Vanguard Energy ETF has gained about 41.72% so far, and is up about 68.19% over the last 12 months (as of 09/07/2022). VDE has traded between $67.36 and $128.99 in this past 52-week period.
The ETF has a beta of 1.40 and standard deviation of 42.98% for the trailing three-year period, making it a high risk choice in the space. With about 111 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 an outstanding 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 $2.12 billion in assets, Energy Select Sector SPDR ETF has $36.86 billion. IYE has an expense ratio of 0.41% 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)?
Launched on 09/23/2004, the Vanguard Energy ETF (VDE - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Energy - Broad segment of the equity market.
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.
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 1, placing it in top 6%.
Index Details
The fund is sponsored by Vanguard. It has amassed assets over $7.78 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
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 0.10%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 3.30%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many 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 20.26% of total assets, followed by Chevron Corp. (CVX - Free Report) and Conocophillips (COP - Free Report) .
The top 10 holdings account for about 66.47% of total assets under management.
Performance and Risk
Year-to-date, the Vanguard Energy ETF has gained about 41.72% so far, and is up about 68.19% over the last 12 months (as of 09/07/2022). VDE has traded between $67.36 and $128.99 in this past 52-week period.
The ETF has a beta of 1.40 and standard deviation of 42.98% for the trailing three-year period, making it a high risk choice in the space. With about 111 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 an outstanding 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 $2.12 billion in assets, Energy Select Sector SPDR ETF has $36.86 billion. IYE has an expense ratio of 0.41% 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.