Yahoo Finance Should Vanguard Small-Cap Value ETF (VBR) Be on Your Investing Radar?
Launched on 01/26/2004, the Vanguard Small-Cap Value ETF (VBR) is a passively managed exchange traded fund designed to provide a broad exposure to the Small Cap Value segment of the US equity market.
The fund is sponsored by Vanguard. It has amassed assets over $24.57 billion, making it the largest ETFs attempting to match the Small Cap Value segment of the US equity market.
Why Small Cap Value
With more potential comes more risk, and small cap companies, with market capitalization below $2 billion, epitomizes this way of thinking.
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.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are 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 2.13%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Industrials sector--about 23.20% of the portfolio. Financials and Consumer Discretionary round out the top three.
Looking at individual holdings, Steel Dynamics Inc. (STLD) accounts for about 0.77% of total assets, followed by Idex Corp. (IEX) and Howmet Aerospace Inc. (HWM).
Performance and Risk
VBR seeks to match the performance of the CRSP U.S. Small Cap Value Index before fees and expenses. The CRSP U.S. Small Cap Value Index measures the investment return of small-capitalization value stocks.
The ETF has added roughly 3.74% so far this year and is down about -2.47% in the last one year (as of 06/08/2023). In the past 52-week period, it has traded between $143.40 and $177.69.
The ETF has a beta of 1.15 and standard deviation of 23.02% for the trailing three-year period, making it a medium risk choice in the space. With about 858 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard Small-Cap 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, VBR is an excellent 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 S&P Small-Cap 600 Value ETF (IJS) and the iShares Russell 2000 Value ETF (IWN) track a similar index. While iShares S&P Small-Cap 600 Value ETF has $6.89 billion in assets, iShares Russell 2000 Value ETF has $11.42 billion. IJS has an expense ratio of 0.18% and IWN charges 0.23%.
Bottom-Line
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they 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 Small-Cap Value ETF (VBR): ETF Research Reports
Steel Dynamics, Inc. (STLD) : Free Stock Analysis Report
IDEX Corporation (IEX) : Free Stock Analysis Report
iShares Russell 2000 Value ETF (IWN): ETF Research Reports
iShares S&P Small-Cap 600 Value ETF (IJS): ETF Research Reports
Howmet Aerospace Inc. (HWM) : Free Stock Analysis Report
