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Is iShares MSCI USA Value Factor ETF (VLUE) a Strong ETF Right Now?

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The iShares MSCI USA Value Factor ETF (VLUE - Free Report) made its debut on 04/16/2013, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Large Cap Value category of the market.

What Are Smart Beta ETFs?

The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.

A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.

There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.

This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.

Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.

Fund Sponsor & Index

Because the fund has amassed over $7.35 billion, this makes it one of the larger ETFs in the Style Box - Large Cap Value. VLUE is managed by Blackrock. This particular fund, before fees and expenses, seeks to match the performance of the MSCI USA Enhanced Value Index.

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.

Cost & Other Expenses

For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.

Operating expenses on an annual basis are 0.15% for this ETF, which makes it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 3.52%.

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.

For VLUE, it has heaviest allocation in the Information Technology sector --about 25.30% of the portfolio --while Healthcare and Consumer Discretionary round out the top three.

Looking at individual holdings, At&t Inc (T - Free Report) accounts for about 4.81% of total assets, followed by Intel Corporation Corp (INTC - Free Report) and Ford Motor Co (F - Free Report) .

VLUE's top 10 holdings account for about 27.17% of its total assets under management.

Performance and Risk

The ETF has lost about -23.62% so far this year and is down about -17.26% in the last one year (as of 09/28/2022). In the past 52-week period, it has traded between $82.69 and $114.92.

The fund has a beta of 1.01 and standard deviation of 27.03% for the trailing three-year period, which makes VLUE a medium risk choice in this particular space. With about 155 holdings, it effectively diversifies company-specific risk.


IShares MSCI USA Value Factor ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.

IShares Russell 1000 Value ETF (IWD - Free Report) tracks Russell 1000 Value Index and the Vanguard Value ETF (VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $47.39 billion in assets, Vanguard Value ETF has $90.16 billion. IWD has an expense ratio of 0.18% and VTV charges 0.04%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Value.

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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