Looking for broad exposure to the Small Cap Growth segment of the US equity market? You should consider the Vanguard S&P Small-Cap 600 Growth ETF (VIOG - Free Report) , a passively managed exchange traded fund launched on 09/09/2010.
The fund is sponsored by Vanguard. It has amassed assets over $327.98 M, making it one of the average sized ETFs attempting to match the Small Cap Growth segment of the US equity market.
Why Small Cap Growth
Sitting at a market capitalization below $2 billion, small cap companies tend to be high-potential stocks compared to its large and mid cap counterparts, but come with higher risk.
While growth stocks do boast higher than average sales and earnings growth rates, and they are expected to grow faster than the wider market, investors should note these kinds of stocks have higher valuations. Also, growth stocks are a type of equity that carries more risk compared to others. Compared to value stocks, growth stocks are a safer bet in a strong bull market, but don't perform as strongly in almost all other financial environments.
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 0.20%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 0.84%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Healthcare sector--about 23.60% of the portfolio. Industrials and Information Technology round out the top three.
Looking at individual holdings, Nektar Therapeutics Class A (NKTR - Free Report) accounts for about 3.49% of total assets, followed by Cantel Medical Corp. (CMD - Free Report) and Chemed Corp. (CHE - Free Report) .
The top 10 holdings account for about 11.97% of total assets under management.
Performance and Risk
VIOG seeks to match the performance of the S&P Small-Cap 600 Growth Index before fees and expenses. The S&P SmallCap 600 Growth Index represents the growth companies of the S&P SmallCap 600 Index.
The ETF has added about 4.64% so far this year and was up about 17.52% in the last one year (as of 04/24/2018). In the past 52-week period, it has traded between $128.65 and $154.96.
The ETF has a beta of 1.01 and standard deviation of 15.70% for the trailing three-year period, making it a medium risk choice in the space. With about 340 holdings, it effectively diversifies company-specific risk.
Vanguard S&P Small-Cap 600 Growth ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, VIOG is a sufficient option for those seeking exposure to the Small Cap ETFs area of the market. Investors might also want to consider some other ETF options in the space.
The Vanguard Small-Cap Growth ETF (VBK - Free Report) and the iShares Russell 2000 Growth ETF (IWO - Free Report) track a similar index. While Vanguard Small-Cap Growth ETF has $7.42 B in assets, iShares Russell 2000 Growth ETF has $9.65 B. VBK has an expense ratio of 0.07% and IWO charges 0.24%.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are 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.