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Should Vanguard Small-Cap Value ETF (VBR) Be on Your Investing Radar?
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The Vanguard Small-Cap Value ETF (VBR - Free Report) was launched on 01/26/2004, and is a passively managed exchange traded fund designed to offer broad exposure to the Small Cap Value segment of the US equity market.
The fund is sponsored by Vanguard. It has amassed assets over $22.73 billion, making it the largest ETFs attempting to match the Small Cap Value segment of the US equity market.
Why Small Cap Value
Sitting at a market capitalization below $2 billion, small cap companies tend to be high-potential stocks compared to its large and mid cap counterparts, but come with higher risk.
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
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 0.07%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 2.50%.
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.
This ETF has heaviest allocation to the Industrials sector--about 23% of the portfolio. Financials and Consumer Discretionary round out the top three.
Looking at individual holdings, Slcmt1142 accounts for about 0.87% of total assets, followed by Builders Firstsource Inc. (BLDR - Free Report) and Reliance Steel & Aluminum Co. (RS - Free Report) .
The top 10 holdings account for about 5.94% of total assets under management.
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 lost about -3.21% so far this year and was up about 1.78% in the last one year (as of 10/24/2023). In the past 52-week period, it has traded between $150.22 and $177.69.
The ETF has a beta of 1.16 and standard deviation of 21.56% for the trailing three-year period, making it a medium risk choice in the space. With about 855 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 a great 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 Avantis U.S. Small Cap Value ETF (AVUV - Free Report) and the iShares Russell 2000 Value ETF (IWN - Free Report) track a similar index. While Avantis U.S. Small Cap Value ETF has $6.54 billion in assets, iShares Russell 2000 Value ETF has $9.75 billion. AVUV has an expense ratio of 0.25% and IWN charges 0.24%.
Bottom-Line
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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Should Vanguard Small-Cap Value ETF (VBR) Be on Your Investing Radar?
The Vanguard Small-Cap Value ETF (VBR - Free Report) was launched on 01/26/2004, and is a passively managed exchange traded fund designed to offer broad exposure to the Small Cap Value segment of the US equity market.
The fund is sponsored by Vanguard. It has amassed assets over $22.73 billion, making it the largest ETFs attempting to match the Small Cap Value segment of the US equity market.
Why Small Cap Value
Sitting at a market capitalization below $2 billion, small cap companies tend to be high-potential stocks compared to its large and mid cap counterparts, but come with higher risk.
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
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 0.07%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 2.50%.
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.
This ETF has heaviest allocation to the Industrials sector--about 23% of the portfolio. Financials and Consumer Discretionary round out the top three.
Looking at individual holdings, Slcmt1142 accounts for about 0.87% of total assets, followed by Builders Firstsource Inc. (BLDR - Free Report) and Reliance Steel & Aluminum Co. (RS - Free Report) .
The top 10 holdings account for about 5.94% of total assets under management.
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 lost about -3.21% so far this year and was up about 1.78% in the last one year (as of 10/24/2023). In the past 52-week period, it has traded between $150.22 and $177.69.
The ETF has a beta of 1.16 and standard deviation of 21.56% for the trailing three-year period, making it a medium risk choice in the space. With about 855 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 a great 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 Avantis U.S. Small Cap Value ETF (AVUV - Free Report) and the iShares Russell 2000 Value ETF (IWN - Free Report) track a similar index. While Avantis U.S. Small Cap Value ETF has $6.54 billion in assets, iShares Russell 2000 Value ETF has $9.75 billion. AVUV has an expense ratio of 0.25% and IWN charges 0.24%.
Bottom-Line
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.