Designed to provide broad exposure to the Mid Cap Value segment of the US equity market, the Vanguard MidCap Value ETF (VOE) is a passively managed exchange traded fund launched on 08/17/2006.
The fund is sponsored by Vanguard. It has amassed assets over $16.67 billion, making it the largest ETFs attempting to match the Mid Cap Value segment of the US equity market.
Why Mid Cap Value
With market capitalization between $2 billion and $10 billion, mid cap companies usually contain higher growth prospects than large cap companies, and are considered less risky than their small cap counterparts. Thus, companies that fall under this category provide a stable and growth-heavy investment.
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. 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.
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF’s expense ratio.
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 1.91%.
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.
Looking at individual holdings, Carrier Global Corp. (BK4N0D7) accounts for about 1.16% of total assets, followed by Motorola Solutions Inc. (MSI) and Welltower Inc. (WELL).
The top 10 holdings account for about 8.15% of total assets under management.
Performance and Risk
VOE seeks to match the performance of the CRSP U.S. Mid Cap Value Index before fees and expenses. The CRSP U.S. Mid Cap Value Index measures the investment return of mid-capitalization value stocks.
The ETF has lost about -1.99% so far this year and is up about 3.74% in the last one year (as of 05/31/2022). In the past 52-week period, it has traded between $135.17 and $153.17.
The ETF has a beta of 1.05 and standard deviation of 26.41% for the trailing three-year period, making it a medium risk choice in the space. With about 204 holdings, it effectively diversifies company-specific risk.
Vanguard MidCap 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, VOE is an outstanding 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 S&P MidCap 400 Value ETF (IJJ) and the iShares Russell MidCap Value ETF (IWS) track a similar index. While iShares S&P MidCap 400 Value ETF has $7.86 billion in assets, iShares Russell MidCap Value ETF has $14.04 billion. IJJ has an expense ratio of 0.18% and IWS charges 0.23%.
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 MidCap Value ETF (VOE): ETF Research Reports
Motorola Solutions, Inc. (MSI) : Free Stock Analysis Report
iShares S&P MidCap 400 Value ETF (IJJ): ETF Research Reports
iShares Russell MidCap Value ETF (IWS): ETF Research Reports
Welltower Inc. (WELL) : Free Stock Analysis Report
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