Looking for broad exposure to the Large Cap Value segment of the US equity market? You should consider 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 $92.02 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. They tend to be stable companies with predictable cash flows and are usually less volatile 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. 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 0.04%, making it the least expensive products in the space.
It has a 12-month trailing dividend yield of 2.67%.
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.
This ETF has heaviest allocation to the Healthcare sector--about 22.50% of the portfolio. Financials and Industrials round out the top three.
Looking at individual holdings, Berkshire Hathaway Inc. (
BRK.B Quick Quote BRK.B - Free Report) accounts for about 3.07% of total assets, followed by Unitedhealth Group Inc. ( UNH Quick Quote UNH - Free Report) and Johnson & Johnson ( JNJ Quick Quote JNJ - Free Report) .
The top 10 holdings account for about 21.76% of total assets under management.
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 -12.36% so far this year and is down about -4.88% in the last one year (as of 09/29/2022). In the past 52-week period, it has traded between $124.40 and $150.80.
The ETF has a beta of 0.90 and standard deviation of 23.60% for the trailing three-year period, making it a medium risk choice in the space. With about 346 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 outstanding 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 $43.42 billion in assets, iShares Russell 1000 Value ETF has $48.49 billion. VYM has an expense ratio of 0.06% and IWD charges 0.18%. Bottom-Line
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds 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.