Should iShares S&P 500 Value ETF (IVE) Be on Your Investing Radar?

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Launched on 05/22/2000, the iShares S&P 500 Value ETF (IVE) is a passively managed exchange traded fund designed to provide a broad exposure to the Large Cap Value segment of the US equity market.

The fund is sponsored by Blackrock. It has amassed assets over $24.92 billion, making it one of the largest ETFs attempting to match the Large Cap Value segment of the US equity market.

Why Large Cap Value

Companies that fall in the large cap category tend to 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.

Value stocks have lower than average price-to-earnings and price-to-book ratios. They 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

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 0.18%, making it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 2.01%.

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 18.20% of the portfolio. Industrials and Financials round out the top three.

Looking at individual holdings, Berkshire Hathaway Inc Class B (BRKB) accounts for about 3.01% of total assets, followed by Johnson & Johnson (JNJ) and Exxon Mobil Corp (XOM).

The top 10 holdings account for about 16.71% of total assets under management.

Performance and Risk

IVE seeks to match the performance of the S&P 500 Value Index before fees and expenses. The S&P 500 Value Index measures the performance of the large capitalization value sector of the U.S. equity market. It is a subset of the S&P 500 and consists of those stocks in the S&P 500 exhibiting the strongest value characteristics.

The ETF has lost about -4.74% so far this year and is down about -2.11% in the last one year (as of 11/14/2022). In the past 52-week period, it has traded between $128.52 and $159.06.

The ETF has a beta of 0.94 and standard deviation of 24.15% for the trailing three-year period, making it a medium risk choice in the space. With about 450 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares S&P 500 Value ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, IVE 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 iShares Russell 1000 Value ETF (IWD) and the Vanguard Value ETF (VTV) track a similar index. While iShares Russell 1000 Value ETF has $54.89 billion in assets, Vanguard Value ETF has $104.03 billion. IWD has an expense ratio of 0.18% and VTV charges 0.04%.

Bottom-Line

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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iShares S&P 500 Value ETF (IVE): ETF Research Reports
 
Johnson & Johnson (JNJ) : Free Stock Analysis Report
 
Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
 
Vanguard Value ETF (VTV): ETF Research Reports
 
iShares Russell 1000 Value ETF (IWD): ETF Research Reports
 
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