Designed to provide broad exposure to the Small Cap Value segment of the US equity market, the Vanguard S&P SmallCap 600 Value ETF (
VIOV Quick Quote VIOV - Free Report) is a passively managed exchange traded fund launched on 09/09/2010.
The fund is sponsored by Vanguard. It has amassed assets over $1.18 billion, making it one of the average sized ETFs attempting to match the Small Cap Value segment of the US equity market.
Why Small Cap Value
With more potential comes more risk, and small cap companies, with market capitalization below $2 billion, epitomizes this way of thinking.
Value stocks are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their 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.
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.15%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.85%.
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 to the Financials sector--about 22.50% of the portfolio. Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Helmerich & Payne Inc. (
HP Quick Quote HP - Free Report) accounts for about 1.06% of total assets, followed by Patterson-Uti Energy Inc. ( PTEN Quick Quote PTEN - Free Report) and South Jersey Industries Inc. ( SJI Quick Quote SJI - Free Report) .
The top 10 holdings account for about 7.45% of total assets under management.
Performance and Risk
VIOV seeks to match the performance of the S&P SmallCap 600 Value Index before fees and expenses. The S&P SmallCap 600 Value Index represents the value companies of the S&P SmallCap 600 Index.
The ETF has lost about -14.80% so far this year and is down about -8.09% in the last one year (as of 09/19/2022). In the past 52-week period, it has traded between $149.66 and $191.57.
The ETF has a beta of 1.16 and standard deviation of 32.07% for the trailing three-year period, making it a medium risk choice in the space. With about 463 holdings, it effectively diversifies company-specific risk.
Vanguard S&P SmallCap 600 Value 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, VIOV is a great option for investors seeking exposure to the Style Box - Small Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Russell 2000 Value ETF (
IWN Quick Quote IWN - Free Report) and the Vanguard SmallCap Value ETF ( VBR Quick Quote VBR - Free Report) track a similar index. While iShares Russell 2000 Value ETF has $11.81 billion in assets, Vanguard SmallCap Value ETF has $22.61 billion. IWN has an expense ratio of 0.23% and VBR charges 0.07%. 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.