Should You Invest in the Vanguard Energy ETF (VDE)?
Sector ETF report for VDE
Launched on 09/23/2004, the Vanguard Energy ETF (VDE) is a passively managed exchange traded fund designed to provide a broad exposure to the Energy - Broad segment of the equity market.
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.
Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Energy - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 1, placing it in top 6%.
The fund is sponsored by Vanguard. It has amassed assets over $5.75 billion, making it one of the largest ETFs attempting to match the performance of the Energy - Broad segment of the equity market. VDE seeks to match the performance of the MSCI US Investable Market Energy 25/50 Index before fees and expenses.
The MSCI US Investable Market Index (IMI)/Energy 25/50 is made up of stocks of large, mid-size, and small U.S. companies within the energy sector.
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 0.10%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 3.50%.
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.
This ETF has heaviest allocation in the Energy sector--about 100% of the portfolio.
Looking at individual holdings, Exxon Mobil Corp. (XOM) accounts for about 20.31% of total assets, followed by Chevron Corp. (CVX) and Conocophillips (COP).
The top 10 holdings account for about 62.75% of total assets under management.
Performance and Risk
Year-to-date, the Vanguard Energy ETF has added roughly 61.73% so far, and it's up approximately 104.76% over the last 12 months (as of 10/25/2021). VDE has traded between $37.58 and $82.79 in this past 52-week period.
The ETF has a beta of 1.70 and standard deviation of 40.79% for the trailing three-year period, making it a high risk choice in the space. With about 96 holdings, it effectively diversifies company-specific risk.
Vanguard Energy ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, VDE is a great option for investors seeking exposure to the Energy ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
IShares U.S. Energy ETF (IYE) tracks Dow Jones U.S. Oil & Gas Index and the Energy Select Sector SPDR ETF (XLE) tracks Energy Select Sector Index. IShares U.S. Energy ETF has $2.55 billion in assets, Energy Select Sector SPDR ETF has $28.01 billion. IYE has an expense ratio of 0.41% and XLE charges 0.12%.
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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Vanguard Energy ETF (VDE): ETF Research Reports
Chevron Corporation (CVX): Free Stock Analysis Report
Exxon Mobil Corporation (XOM): Free Stock Analysis Report
ConocoPhillips (COP): Free Stock Analysis Report
Energy Select Sector SPDR ETF (XLE): ETF Research Reports
iShares U.S. Energy ETF (IYE): ETF Research Reports
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