Making its debut on 04/16/2013, smart beta exchange traded fund iShares MSCI USA Value Factor ETF (
VLUE Quick Quote VLUE - Free Report) provides investors broad exposure to the Style Box - Large Cap Value category of the market. What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is managed by Blackrock. VLUE has been able to amass assets over $6.46 billion, making it one of the larger ETFs in the Style Box - Large Cap Value. 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.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for VLUE are 0.15%, which makes it one of the cheaper products in the space.
VLUE's 12-month trailing dividend yield is 3.28%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 26.40% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Financials and Healthcare round out the top three.
Taking into account individual holdings, At&t Inc (
T Quick Quote T - Free Report) accounts for about 5.34% of the fund's total assets, followed by Intel Corporation Corp ( INTC Quick Quote INTC - Free Report) and Cisco Systems Inc ( CSCO Quick Quote CSCO - Free Report) .
The top 10 holdings account for about 32.38% of total assets under management.
Performance and Risk
The ETF has added about 0.07% and is down about -8.87% so far this year and in the past one year (as of 06/05/2023), respectively. VLUE has traded between $81.86 and $102.35 during this last 52-week period.
VLUE has a beta of 1.04 and standard deviation of 19.87% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 151 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 Quick Quote IWD - Free Report) tracks Russell 1000 Value Index and the Vanguard Value ETF ( VTV Quick Quote VTV - Free Report) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $49.51 billion in assets, Vanguard Value ETF has $100.72 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.
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.