If you're interested in broad exposure to the Large Cap Value segment of the US equity market, look no further than the iShares MSCI USA Value Factor ETF (
VLUE Quick Quote VLUE - Free Report) , a passively managed exchange traded fund launched on 04/16/2013.
The fund is sponsored by Blackrock. It has amassed assets over $8.26 billion, making it one of the larger ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Large cap companies typically 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.
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. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.15%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 3.01%.
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 Information Technology sector--about 24.60% of the portfolio. Healthcare and Financials round out the top three.
Looking at individual holdings, At&t Inc (
T Quick Quote T - Free Report) accounts for about 4.81% of total assets, followed by Intel Corporation Corp ( INTC Quick Quote INTC - Free Report) and Ford Motor Co ( F Quick Quote F - Free Report) .
The top 10 holdings account for about 27.17% of total assets under management.
Performance and Risk
VLUE seeks to match the performance of the MSCI USA Enhanced Value Index before fees and expenses. 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.
The ETF has lost about -10.88% so far this year and is down about -6.77% in the last one year (as of 11/24/2022). In the past 52-week period, it has traded between $81.86 and $114.92.
The ETF has a beta of 1.04 and standard deviation of 27.56% for the trailing three-year period, making it a medium risk choice in the space. With about 155 holdings, it effectively diversifies company-specific risk.
IShares MSCI USA Value Factor 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, VLUE 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 iShares Russell 1000 Value ETF (
IWD Quick Quote IWD - Free Report) and the Vanguard Value ETF ( VTV Quick Quote VTV - Free Report) track a similar index. While iShares Russell 1000 Value ETF has $55.23 billion in assets, Vanguard Value ETF has $107.01 billion. IWD has an expense ratio of 0.18% and VTV charges 0.04%. Bottom-Line
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they 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.