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Should Vanguard S&P SmallCap 600 Value ETF (VIOV) Be on Your Investing Radar?

Style Box ETF report for VIOV

By
This story originally appeared on Zacks

Launched on 09/09/2010, the Vanguard S&P SmallCap 600 Value ETF (VIOV) is a passively managed exchange traded fund designed to provide a broad exposure to the Small Cap Value segment of the US equity market.

- Zacks

The fund is sponsored by Vanguard. It has amassed assets over $1.26 billion, making it one of the average sized ETFs attempting to match the Small Cap Value segment of the US equity market.

Why Small Cap Value

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.

Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. They are however likely to underperform growth stocks in strong bull markets.

Costs

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

Annual operating expenses for this ETF are 0.15%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 1.47%.

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 Financials sector--about 25.20% of the portfolio. Industrials and Consumer Discretionary round out the top three.

Looking at individual holdings, Macy's Inc. (M) accounts for about 1.26% of total assets, followed by Pdc Energy Inc. (PDCE) and Signet Jewelers Ltd. (SIG).

The top 10 holdings account for about 3.55% of total assets under management.

Performance and Risk

VIOV seeks to match the performance of the S&P SmallCap 600 Value Index before fees and expenses. The S&P SmallCap 600 Value Index represents the value companies of the S&P SmallCap 600 Index.

The ETF has gained about 28.91% so far this year and it's up approximately 58.48% in the last one year (as of 10/28/2021). In the past 52-week period, it has traded between $110.01 and $191.02.

The ETF has a beta of 1.30 and standard deviation of 31.45% for the trailing three-year period, making it a medium risk choice in the space. With about 482 holdings, it effectively diversifies company-specific risk.

Alternatives

Vanguard S&P SmallCap 600 Value 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, VIOV is a great option for investors seeking exposure to the Style Box - Small Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.

The iShares Russell 2000 Value ETF (IWN) and the Vanguard SmallCap Value ETF (VBR) track a similar index. While iShares Russell 2000 Value ETF has $15.81 billion in assets, Vanguard SmallCap Value ETF has $25.44 billion. IWN has an expense ratio of 0.24% and VBR charges 0.07%.

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.



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Vanguard S&P SmallCap 600 Value ETF (VIOV): ETF Research Reports

 

Macy's, Inc. (M): Free Stock Analysis Report

 

Signet Jewelers Limited (SIG): Free Stock Analysis Report

 

PDC Energy, Inc. (PDCE): Free Stock Analysis Report

 

Vanguard SmallCap Value ETF (VBR): ETF Research Reports

 

iShares Russell 2000 Value ETF (IWN): ETF Research Reports

 

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