Should Vanguard MidCap Growth ETF (VOT) Be on Your Investing Radar?
Style Box ETF report for VOT
Launched on 08/17/2006, the Vanguard MidCap Growth ETF (VOT) is a passively managed exchange traded fund designed to provide a broad exposure to the Mid Cap Growth segment of the US equity market.
The fund is sponsored by Vanguard. It has amassed assets over $12.42 billion, making it one of the largest ETFs attempting to match the Mid Cap Growth segment of the US equity market.
Why Mid Cap Growth
Mid cap companies have market capitalization between $2 billion and $10 billion. They usually have higher growth prospects than large cap companies and are less volatile than small cap companies. Thus, companies that fall under this category provide a stable and growth-heavy investment.
Growth stocks have higher than average sales and earnings growth rates. While these are expected to grow faster than the broader market, they also have higher valuations. Additionally, growth stocks have a greater level of risk associated with them. When you consider growth versus value, growth stocks are usually the clear winner in strong bull markets but tend to fall flat in nearly all other environments.
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 0.07%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.33%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Information Technology sector--about 34.20% of the portfolio. Healthcare and Industrials round out the top three.
Looking at individual holdings, Dexcom Inc. (DXCM) accounts for about 1.46% of total assets, followed by Marvell Technology Inc. (MRVL) and Msci Inc. (MSCI).
The top 10 holdings account for about 10.28% of total assets under management.
Performance and Risk
VOT seeks to match the performance of the CRSP U.S. Mid Cap Growth Index before fees and expenses. CRSP U.S. Mid Cap Growth Index measures the investment return of mid-capitalization growth stocks.
The ETF has added roughly 24.05% so far this year and was up about 43.55% in the last one year (as of 11/03/2021). In the past 52-week period, it has traded between $190.11 and $258.69.
The ETF has a beta of 1.06 and standard deviation of 24.51% for the trailing three-year period, making it a medium risk choice in the space. With about 187 holdings, it effectively diversifies company-specific risk.
Vanguard MidCap Growth 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, VOT is an excellent option for investors seeking exposure to the Style Box - Mid Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares S&P MidCap 400 Growth ETF (IJK) and the iShares Russell MidCap Growth ETF (IWP) track a similar index. While iShares S&P MidCap 400 Growth ETF has $8.64 billion in assets, iShares Russell MidCap Growth ETF has $16.83 billion. IJK has an expense ratio of 0.17% and IWP charges 0.23%.
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.
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Vanguard MidCap Growth ETF (VOT): ETF Research Reports
DexCom, Inc. (DXCM): Free Stock Analysis Report
Marvell Technology, Inc. (MRVL): Free Stock Analysis Report
MSCI Inc (MSCI): Free Stock Analysis Report
iShares Russell MidCap Growth ETF (IWP): ETF Research Reports
iShares S&P MidCap 400 Growth ETF (IJK): ETF Research Reports
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