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 $8.44 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 fall in the large cap category tend to have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.

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. While 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

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are 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 2.28%.

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 25.90% of the portfolio. Healthcare and Industrials round out the top three.

Looking at individual holdings, Jpmorgan Chase & Co (JPM Quick QuoteJPM - Free Report) accounts for about 3.49% of total assets, followed by Berkshire Hathaway Inc (BRK/B) and Unitedhealth Group Inc (UNH Quick QuoteUNH - Free Report) .

The top 10 holdings account for about 24.43% 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 has added roughly 19.21% so far this year and is up about 22.88% in the last one year (as of 12/13/2024). In the past 52-week period, it has traded between $108.05 and $133.48.

The ETF has a beta of 0.84 and standard deviation of 13.61% for the trailing three-year period, making it a medium risk choice in the space. With about 138 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 $65.60 billion in assets, Vanguard Value ETF has $130.60 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.