Should Vanguard Value ETF (VTV) Be on Your Investing Radar?
Style Box ETF report for VTV
The Vanguard Value ETF (VTV) was launched on 01/26/2004, and is a passively managed exchange traded fund designed to offer broad exposure to the Large Cap Value segment of the US equity market.
The fund is sponsored by Vanguard. It has amassed assets over $87.19 billion, making it the largest ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Large cap companies typically have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.
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.
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 0.04%, making it the least expensive products in the space.
It has a 12-month trailing dividend yield of 2.13%.
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 to the Financials sector--about 23.60% of the portfolio. Healthcare and Industrials round out the top three.
Looking at individual holdings, Jpmorgan Chase & Co. (JPM) accounts for about 2.90% of total assets, followed by Berkshire Hathaway Inc. (BRK.B) and Johnson & Johnson (JNJ).
Performance and Risk
VTV seeks to match the performance of the CRSP U.S. Large Cap Value Index before fees and expenses. CRSP U.S. Large Cap Value Index measures the investment return of large-capitalization value stocks.
The ETF has gained about 23.46% so far this year and is up about 42.39% in the last one year (as of 11/01/2021). In the past 52-week period, it has traded between $104.48 and $143.56.
The ETF has a beta of 0.97 and standard deviation of 22.97% for the trailing three-year period, making it a medium risk choice in the space. With about 358 holdings, it effectively diversifies company-specific risk.
Vanguard 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, VTV is an outstanding 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 Vanguard High Dividend Yield ETF (VYM) and the iShares Russell 1000 Value ETF (IWD) track a similar index. While Vanguard High Dividend Yield ETF has $39.52 billion in assets, iShares Russell 1000 Value ETF has $56.53 billion. VYM has an expense ratio of 0.06% and IWD charges 0.19%.
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 Value ETF (VTV): ETF Research Reports
JPMorgan Chase & Co. (JPM): Free Stock Analysis Report
Johnson & Johnson (JNJ): Free Stock Analysis Report
Berkshire Hathaway Inc. (BRK.B): Free Stock Analysis Report
Vanguard High Dividend Yield ETF (VYM): ETF Research Reports
iShares Russell 1000 Value ETF (IWD): ETF Research Reports
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