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Should Vanguard Value ETF (VTV) Be on Your Investing Radar?
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Launched on 01/26/2004, the Vanguard Value ETF (VTV - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Large Cap Value segment of the US equity market.
The fund is sponsored by Vanguard. It has amassed assets over $96.11 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.
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. Considering long-term performance, value stocks have outperformed growth stocks in almost all markets; however, they are more likely to underperform growth stocks in strong bull markets.
Costs
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 2.73%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Financials sector--about 20.70% of the portfolio. Healthcare and Industrials round out the top three.
Looking at individual holdings, Berkshire Hathaway Inc. (BRK.B - Free Report) accounts for about 3.65% of total assets, followed by Unitedhealth Group Inc. (UNH - Free Report) and Jpmorgan Chase & Co. (JPM - Free Report) .
The top 10 holdings account for about 22.81% 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 -1.97% so far this year and was up about 8.19% in the last one year (as of 10/23/2023). In the past 52-week period, it has traded between $132.13 and $147.18.
The ETF has a beta of 0.89 and standard deviation of 15.15% for the trailing three-year period, making it a medium risk choice in the space. With about 345 holdings, it effectively diversifies company-specific risk.
Alternatives
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 iShares Russell 1000 Value ETF (IWD - Free Report) and the Vanguard High Dividend Yield ETF (VYM - Free Report) track a similar index. While iShares Russell 1000 Value ETF has $46.73 billion in assets, Vanguard High Dividend Yield ETF has $46.92 billion. IWD has an expense ratio of 0.19% and VYM charges 0.06%.
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.
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Should Vanguard Value ETF (VTV) Be on Your Investing Radar?
Launched on 01/26/2004, the Vanguard Value ETF (VTV - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Large Cap Value segment of the US equity market.
The fund is sponsored by Vanguard. It has amassed assets over $96.11 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.
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. Considering long-term performance, value stocks have outperformed growth stocks in almost all markets; however, they are more likely to underperform growth stocks in strong bull markets.
Costs
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 2.73%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Financials sector--about 20.70% of the portfolio. Healthcare and Industrials round out the top three.
Looking at individual holdings, Berkshire Hathaway Inc. (BRK.B - Free Report) accounts for about 3.65% of total assets, followed by Unitedhealth Group Inc. (UNH - Free Report) and Jpmorgan Chase & Co. (JPM - Free Report) .
The top 10 holdings account for about 22.81% 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 -1.97% so far this year and was up about 8.19% in the last one year (as of 10/23/2023). In the past 52-week period, it has traded between $132.13 and $147.18.
The ETF has a beta of 0.89 and standard deviation of 15.15% for the trailing three-year period, making it a medium risk choice in the space. With about 345 holdings, it effectively diversifies company-specific risk.
Alternatives
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 iShares Russell 1000 Value ETF (IWD - Free Report) and the Vanguard High Dividend Yield ETF (VYM - Free Report) track a similar index. While iShares Russell 1000 Value ETF has $46.73 billion in assets, Vanguard High Dividend Yield ETF has $46.92 billion. IWD has an expense ratio of 0.19% and VYM charges 0.06%.
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.