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Should Vanguard Russell 2000 Value ETF (VTWV) Be on Your Investing Radar?

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If you're interested in broad exposure to the Small Cap Value segment of the US equity market, look no further than the Vanguard Russell 2000 Value ETF (VTWV - Free Report) , a passively managed exchange traded fund launched on 09/22/2010.

The fund is sponsored by Vanguard. It has amassed assets over $795.84 million, 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

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.

While 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. 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

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 0.15%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 2.09%.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Financials sector--about 27.50% of the portfolio. Industrials and Consumer Discretionary round out the top three.

Looking at individual holdings, Slbbh1142 accounts for about 2.72% of total assets, followed by Commercial Metals Co. (CMC - Free Report) and Oasis Petroleum Inc. (CHRD - Free Report) .

The top 10 holdings account for about 6.69% of total assets under management.

Performance and Risk

VTWV seeks to match the performance of the Russell 2000 Value Index before fees and expenses. The Russell 2000 Value Index measures the performance of the small-cap value segment of the U.S. equity universe.

The ETF has lost about -3.24% so far this year and it's up approximately 10.76% in the last one year (as of 01/08/2024). In the past 52-week period, it has traded between $110.31 and $139.18.

The ETF has a beta of 1.17 and standard deviation of 22.73% for the trailing three-year period, making it a medium risk choice in the space. With about 1465 holdings, it effectively diversifies company-specific risk.

Alternatives

Vanguard Russell 2000 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, VTWV 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 - Free Report) and the Vanguard Small-Cap Value ETF (VBR - Free Report) track a similar index. While iShares Russell 2000 Value ETF has $12.11 billion in assets, Vanguard Small-Cap Value ETF has $26.42 billion. IWN has an expense ratio of 0.24% and VBR charges 0.07%.

Bottom-Line

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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