Looking for broad exposure to the Small Cap Value segment of the US equity market? You should consider the Vanguard S&P SmallCap 600 Value ETF (VIOV), a passively managed exchange traded fund launched on 09/09/2010.
The fund is sponsored by Vanguard. It has amassed assets over $1.16 billion, making it one of the average sized 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.
Value stocks have lower than average price-to-earnings and price-to-book ratios. They also have lower than average sales and earnings growth rates. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.
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 0.15%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.86%.
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 Financials sector–about 22.60% of the portfolio. Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Bankunited Inc. (BKU) accounts for about 0.72% of total assets, followed by First Hawaiian Inc. (FHB) and Resideo Technologies Inc. (REZI).
The top 10 holdings account for about 4.67% of total assets under management.
Performance and Risk
VIOV seeks to match the performance of the S&P SmallCap 600 Value Index before fees and expenses. The S&P SmallCap 600 Value Index represents the value companies of the S&P SmallCap 600 Index.
The ETF has lost about -15.43% so far this year and is down about -9.84% in the last one year (as of 07/18/2022). In the past 52-week period, it has traded between $149.66 and $191.57.
The ETF has a beta of 1.17 and standard deviation of 32.06% for the trailing three-year period, making it a medium risk choice in the space. With about 461 holdings, it effectively diversifies company-specific risk.
Vanguard S&P SmallCap 600 Value 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, VIOV 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 Russell 2000 Value ETF (IWN) and the Vanguard SmallCap Value ETF (VBR) track a similar index. While iShares Russell 2000 Value ETF has $11.52 billion in assets, Vanguard SmallCap Value ETF has $21.95 billion. IWN has an expense ratio of 0.24% and VBR charges 0.07%.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are 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 SmallCap 600 Value ETF (VIOV): ETF Research Reports
BankUnited, Inc. (BKU) : Free Stock Analysis Report
Vanguard SmallCap Value ETF (VBR): ETF Research Reports
iShares Russell 2000 Value ETF (IWN): ETF Research Reports
First Hawaiian, Inc. (FHB) : Free Stock Analysis Report
Resideo Technologies, Inc. (REZI) : Free Stock Analysis Report
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