Looking for broad exposure to the Mid Cap Value segment of the US equity market? You should consider the Vanguard S&P MidCap 400 Value ETF (IVOV), a passively managed exchange traded fund launched on 09/09/2010.
The fund is sponsored by Vanguard. It has amassed assets over $771.45 million, making it one of the average sized ETFs attempting to match the Mid Cap Value segment of the US equity market.
Why Mid Cap Value
Compared to large and small cap companies, mid cap businesses tend to have higher growth prospects and are less volatile, respectively, with market capitalization between $2 billion and $10 billion. These types of companies, then, have a good balance of stability and growth potential.
Value stocks are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their 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.
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.15%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.98%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Looking at individual holdings, Medical Properties Trust Inc. (MPW) accounts for about 1.16% of total assets, followed by Aecom (ACM) and Lear Corp. (LEA).
The top 10 holdings account for about 8.39% of total assets under management.
Performance and Risk
IVOV seeks to match the performance of the S&P MidCap 400 Value Index before fees and expenses. The S&P MidCap 400 Value Index measures the performance of value stocks of medium-size U.S. companies.
The ETF has lost about -10.33% so far this year and is down about -6.07% in the last one year (as of 05/25/2022). In the past 52-week period, it has traded between $149.18 and $174.89.
The ETF has a beta of 1.18 and standard deviation of 29.73% for the trailing three-year period, making it a medium risk choice in the space. With about 298 holdings, it effectively diversifies company-specific risk.
Vanguard S&P MidCap 400 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, IVOV is an excellent option for investors seeking exposure to the Style Box – Mid Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Russell MidCap Value ETF (IWS) and the Vanguard MidCap Value ETF (VOE) track a similar index. While iShares Russell MidCap Value ETF has $13.01 billion in assets, Vanguard MidCap Value ETF has $15.83 billion. IWS has an expense ratio of 0.23% and VOE charges 0.07%.
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 S&P MidCap 400 Value ETF (IVOV): ETF Research Reports
AECOM (ACM) : Free Stock Analysis Report
Lear Corporation (LEA) : Free Stock Analysis Report
Medical Properties Trust, Inc. (MPW) : Free Stock Analysis Report
Vanguard MidCap Value ETF (VOE): ETF Research Reports
iShares Russell MidCap Value ETF (IWS): ETF Research Reports
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