Looking for broad exposure to the Large Cap Value segment of the US equity market? You should consider the Vanguard Mega Cap Value ETF (MGV Quick QuoteMGV - Free Report) , a passively managed exchange traded fund launched on 12/17/2007.

The fund is sponsored by Vanguard. It has amassed assets over $8.52 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

Companies that find themselves in the large cap category 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.

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. Value stocks have outperformed growth stocks in nearly all markets when you consider long-term performance, growth stocks are more likely to outpace value stocks in strong bull markets.

Costs

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 0.07%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 2.27%.

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 Financials sector--about 23.20% of the portfolio. Healthcare and Industrials round out the top three.

Looking at individual holdings, Broadcom Inc (AVGO Quick QuoteAVGO - Free Report) accounts for about 4.39% of total assets, followed by Jpmorgan Chase & Co (JPM Quick QuoteJPM - Free Report) and Berkshire Hathaway Inc (BRK/B).

The top 10 holdings account for about 26% of total assets under management.

Performance and Risk

MGV seeks to match the performance of the CRSP U.S. Mega Cap Value Index before fees and expenses. The CRSP U.S. Mega Cap Value Index is a float-adjusted, market-capitalization-weighted index designed to measure equity market performance of mega-capitalization value stocks in the United States.

The ETF return is roughly 19.86% so far this year and it's up approximately 30.61% in the last one year (as of 10/10/2024). In the past 52-week period, it has traded between $97.07 and $128.93.

The ETF has a beta of 0.84 and standard deviation of 13.72% for the trailing three-year period, making it a medium risk choice in the space. With about 136 holdings, it effectively diversifies company-specific risk.

Alternatives

Vanguard Mega Cap 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, MGV is an excellent 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 Schwab U.S. Dividend Equity ETF (SCHD Quick QuoteSCHD - Free Report) and the Vanguard Value ETF (VTV Quick QuoteVTV - Free Report) track a similar index. While Schwab U.S. Dividend Equity ETF has $62.34 billion in assets, Vanguard Value ETF has $128.84 billion. SCHD has an expense ratio of 0.06% and VTV charges 0.04%.

Bottom-Line

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

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.