If you’re interested in broad exposure to the Large Cap Value segment of the US equity market, look no further than the Vanguard S&P 500 Value ETF (VOOV), a passively managed exchange traded fund launched on 09/09/2010.
The fund is sponsored by Vanguard. It has amassed assets over $2.93 billion, making it one of the average sized 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. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.
Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. While value stocks have outperformed growth stocks in nearly all markets when you consider long-term performance, growth stocks are more likely to outpace value 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 0.10%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 2.06%.
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 17.70% of the portfolio. Financials and Industrials round out the top three.
Looking at individual holdings, Berkshire Hathaway Inc. (BRK.B) accounts for about 3.09% of total assets, followed by Johnson & Johnson (JNJ) and Exxon Mobil Corp. (XOM).
The top 10 holdings account for about 18.36% of total assets under management.
Performance and Risk
VOOV 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 large capitalization value stocks.
The ETF has lost about -4.77% so far this year and is down about -2.10% in the last one year (as of 11/14/2022). In the past 52-week period, it has traded between $124.14 and $153.78.
The ETF has a beta of 0.94 and standard deviation of 24.13% for the trailing three-year period, making it a medium risk choice in the space. With about 449 holdings, it effectively diversifies company-specific risk.
Vanguard 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, VOOV 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%.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also 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 S&P 500 Value ETF (VOOV): ETF Research Reports
Johnson & Johnson (JNJ) : Free Stock Analysis Report
Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
Berkshire Hathaway Inc. (BRK.B) : Free Stock Analysis Report
Vanguard Value ETF (VTV): ETF Research Reports
iShares Russell 1000 Value ETF (IWD): ETF Research Reports
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