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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 $30.84 billion, making it the largest ETFs attempting to match the Small Cap Value segment of the US equity market.
Why Small Cap Value
There's a lot of potential to investing in small cap companies, but with market capitalization below $2 billion, that high potential comes with even 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. Considering long-term performance, value stocks have outperformed growth stocks in almost all markets; however, they are more likely to underperform growth stocks in strong bull markets.
Costs
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 0.07%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.99%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Financials sector--about 21.70% of the portfolio. Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Smurfit Westrock Plc (SW - Free Report) accounts for about 0.77% of total assets, followed by First Citizens Bancshares Inc/nc (FCNCA - Free Report) and Slcmt1142.
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 -0.65% so far this year and is up roughly 14.36% in the last one year (as of 01/14/2025). In the past 52-week period, it has traded between $172.45 and $217.30.
The ETF has a beta of 1.15 and standard deviation of 20.02% for the trailing three-year period, making it a medium risk choice in the space. With about 840 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard Small-Cap 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, 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 iShares Russell 2000 Value ETF (IWN - Free Report) and the Avantis U.S. Small Cap Value ETF (AVUV - Free Report) track a similar index. While iShares Russell 2000 Value ETF has $11.98 billion in assets, Avantis U.S. Small Cap Value ETF has $15.14 billion. IWN has an expense ratio of 0.24% and AVUV charges 0.25%.
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 $30.84 billion, making it the largest ETFs attempting to match the Small Cap Value segment of the US equity market.
Why Small Cap Value
There's a lot of potential to investing in small cap companies, but with market capitalization below $2 billion, that high potential comes with even 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. Considering long-term performance, value stocks have outperformed growth stocks in almost all markets; however, they are more likely to underperform growth stocks in strong bull markets.
Costs
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 0.07%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.99%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Financials sector--about 21.70% of the portfolio. Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Smurfit Westrock Plc (SW - Free Report) accounts for about 0.77% of total assets, followed by First Citizens Bancshares Inc/nc (FCNCA - Free Report) and Slcmt1142.
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 -0.65% so far this year and is up roughly 14.36% in the last one year (as of 01/14/2025). In the past 52-week period, it has traded between $172.45 and $217.30.
The ETF has a beta of 1.15 and standard deviation of 20.02% for the trailing three-year period, making it a medium risk choice in the space. With about 840 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard Small-Cap 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, 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 iShares Russell 2000 Value ETF (IWN - Free Report) and the Avantis U.S. Small Cap Value ETF (AVUV - Free Report) track a similar index. While iShares Russell 2000 Value ETF has $11.98 billion in assets, Avantis U.S. Small Cap Value ETF has $15.14 billion. IWN has an expense ratio of 0.24% and AVUV charges 0.25%.
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.