Should Vanguard S&P 500 ETF (VOO) Be on Your Investing Radar?

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Designed to provide broad exposure to the Large Cap Blend segment of the US equity market, the Vanguard S&P 500 ETF (VOO) is a passively managed exchange traded fund launched on 09/09/2010.

The fund is sponsored by Vanguard. It has amassed assets over $258.23 billion, making it one of the largest ETFs attempting to match the Large Cap Blend segment of the US equity market.

Why Large Cap Blend

Large cap companies typically 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.

Blend ETFs are aptly named, since they tend to hold a mix of growth and value stocks, as well as show characteristics of both kinds of equities.

Costs

When considering an ETF’s total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

Annual operating expenses for this ETF are 0.03%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 1.45%.

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.

Looking at individual holdings, Apple Inc. (AAPL) accounts for about 7.06% of total assets, followed by Microsoft Corp. (MSFT) and Amazon.com Inc. (AMZN).

The top 10 holdings account for about 20.58% of total assets under management.

Performance and Risk

VOO seeks to match the performance of the S&P 500 Index before fees and expenses. The S&P 500 Index measures the performance of the large-capitalization sector of the U.S. equity market.

The ETF has lost about -12.77% so far this year and it’s up approximately 0.51% in the last one year (as of 05/30/2022). In the past 52-week period, it has traded between $357.93 and $439.25.

The ETF has a beta of 1 and standard deviation of 23.63% for the trailing three-year period, making it a medium risk choice in the space. With about 507 holdings, it effectively diversifies company-specific risk.

Alternatives

Vanguard S&P 500 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, VOO is an excellent option for investors seeking exposure to the Style Box – Large Cap Blend segment of the market. There are other additional ETFs in the space that investors could consider as well.

The iShares Core S&P 500 ETF (IVV) and the SPDR S&P 500 ETF (SPY) track the same index. While iShares Core S&P 500 ETF has $301.87 billion in assets, SPDR S&P 500 ETF has $378.86 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.

Bottom-Line

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 ETF (VOO): ETF Research Reports
 
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
 
Apple Inc. (AAPL) : Free Stock Analysis Report
 
Microsoft Corporation (MSFT) : Free Stock Analysis Report
 
SPDR S&P 500 ETF (SPY): ETF Research Reports
 
iShares Core S&P 500 ETF (IVV): ETF Research Reports
 
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