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Should Vanguard MidCap Growth ETF (VOT) Be on Your Investing Radar?
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Looking for broad exposure to the Mid Cap Growth segment of the US equity market? You should consider the Vanguard MidCap Growth ETF (VOT - Free Report) , a passively managed exchange traded fund launched on 08/17/2006.
The fund is sponsored by Vanguard. It has amassed assets over $10.13 billion, making it one of the largest ETFs attempting to match the Mid Cap Growth segment of the US equity market.
Why Mid Cap Growth
Mid cap companies have market capitalization between $2 billion and $10 billion. They usually have higher growth prospects than large cap companies and are less volatile than small cap companies. Thus, companies that fall under this category provide a stable and growth-heavy investment.
Growth stocks have higher than average sales and earnings growth rates. While these are expected to grow faster than the broader market, they also have higher valuations. Something to keep in mind is the higher level of volatility that is affiliated with growth stocks. They are likely to outperform value stocks in strong bull markets but over the longer-term, value stocks have delivered better returns than growth stocks in almost all markets.
Costs
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.07%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.57%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, 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 30.70% of the portfolio. Healthcare and Industrials round out the top three.
Looking at individual holdings, Devon Energy Corp. (DVN - Free Report) accounts for about 1.73% of total assets, followed by Synopsys Inc. (SNPS - Free Report) and Centene Corp. (CNC - Free Report) .
The top 10 holdings account for about 14.92% of total assets under management.
Performance and Risk
VOT seeks to match the performance of the CRSP U.S. Mid Cap Growth Index before fees and expenses. The CRSP U.S. Mid Cap Growth Index measures the investment return of mid-capitalization growth stocks.
The ETF has lost about -21.53% so far this year and is down about -20.18% in the last one year (as of 09/12/2022). In the past 52-week period, it has traded between $167.96 and $265.79.
The ETF has a beta of 1.10 and standard deviation of 27.87% for the trailing three-year period, making it a medium risk choice in the space. With about 184 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard MidCap Growth 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, VOT is a great option for investors seeking exposure to the Style Box - Mid Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares S&P MidCap 400 Growth ETF (IJK - Free Report) and the iShares Russell MidCap Growth ETF (IWP - Free Report) track a similar index. While iShares S&P MidCap 400 Growth ETF has $7.03 billion in assets, iShares Russell MidCap Growth ETF has $12.52 billion. IJK has an expense ratio of 0.17% and IWP charges 0.23%.
Bottom-Line
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.
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 Vanguard MidCap Growth ETF (VOT) Be on Your Investing Radar?
Looking for broad exposure to the Mid Cap Growth segment of the US equity market? You should consider the Vanguard MidCap Growth ETF (VOT - Free Report) , a passively managed exchange traded fund launched on 08/17/2006.
The fund is sponsored by Vanguard. It has amassed assets over $10.13 billion, making it one of the largest ETFs attempting to match the Mid Cap Growth segment of the US equity market.
Why Mid Cap Growth
Mid cap companies have market capitalization between $2 billion and $10 billion. They usually have higher growth prospects than large cap companies and are less volatile than small cap companies. Thus, companies that fall under this category provide a stable and growth-heavy investment.
Growth stocks have higher than average sales and earnings growth rates. While these are expected to grow faster than the broader market, they also have higher valuations. Something to keep in mind is the higher level of volatility that is affiliated with growth stocks. They are likely to outperform value stocks in strong bull markets but over the longer-term, value stocks have delivered better returns than growth stocks in almost all markets.
Costs
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.07%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.57%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, 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 30.70% of the portfolio. Healthcare and Industrials round out the top three.
Looking at individual holdings, Devon Energy Corp. (DVN - Free Report) accounts for about 1.73% of total assets, followed by Synopsys Inc. (SNPS - Free Report) and Centene Corp. (CNC - Free Report) .
The top 10 holdings account for about 14.92% of total assets under management.
Performance and Risk
VOT seeks to match the performance of the CRSP U.S. Mid Cap Growth Index before fees and expenses. The CRSP U.S. Mid Cap Growth Index measures the investment return of mid-capitalization growth stocks.
The ETF has lost about -21.53% so far this year and is down about -20.18% in the last one year (as of 09/12/2022). In the past 52-week period, it has traded between $167.96 and $265.79.
The ETF has a beta of 1.10 and standard deviation of 27.87% for the trailing three-year period, making it a medium risk choice in the space. With about 184 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard MidCap Growth 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, VOT is a great option for investors seeking exposure to the Style Box - Mid Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares S&P MidCap 400 Growth ETF (IJK - Free Report) and the iShares Russell MidCap Growth ETF (IWP - Free Report) track a similar index. While iShares S&P MidCap 400 Growth ETF has $7.03 billion in assets, iShares Russell MidCap Growth ETF has $12.52 billion. IJK has an expense ratio of 0.17% and IWP charges 0.23%.
Bottom-Line
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.
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.