Designed to provide broad exposure to the Large Cap Value segment of the US equity market, the iShares MSCI USA Value Factor ETF (VLUE) is a passively managed exchange traded fund launched on 04/16/2013.
The fund is sponsored by Blackrock. It has amassed assets over $6.01 billion, making it one of the larger ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Companies that fall in the large cap category tend to have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.
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
Investors should also pay attention to an ETF’s expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain 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 3.15%.
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 Information Technology sector–about 29.20% of the portfolio. Healthcare and Financials round out the top three.
Looking at individual holdings, Intel Corporation Corp (INTC) accounts for about 5.91% of total assets, followed by At&t Inc (T) and Cisco Systems Inc (CSCO).
The top 10 holdings account for about 34.52% of total assets under management.
Performance and Risk
VLUE seeks to match the performance of the MSCI USA Enhanced Value Index before fees and expenses. The MSCI USA Enhanced Value Index is based on a traditional market capitalization-weighted parent index, the MSCI USA Index which includes U.S. large and mid capitalization stocks.
The ETF has lost about -1.82% so far this year and is down about -2.56% in the last one year (as of 11/01/2023). In the past 52-week period, it has traded between $85.95 and $99.54.
The ETF has a beta of 1.04 and standard deviation of 18.33% for the trailing three-year period, making it a medium risk choice in the space. With about 152 holdings, it effectively diversifies company-specific risk.
Alternatives
IShares MSCI USA Value Factor 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, VLUE is an outstanding option for investors seeking exposure to the Style Box – Large Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.
The Vanguard High Dividend Yield ETF (VYM) and the Vanguard Value ETF (VTV) track a similar index. While Vanguard High Dividend Yield ETF has $46.57 billion in assets, Vanguard Value ETF has $95.63 billion. VYM has an expense ratio of 0.06% and VTV charges 0.04%.
Bottom-Line
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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iShares MSCI USA Value Factor ETF (VLUE): ETF Research Reports
Intel Corporation (INTC) : Free Stock Analysis Report
AT&T Inc. (T) : Free Stock Analysis Report
Cisco Systems, Inc. (CSCO) : Free Stock Analysis Report
Vanguard Value ETF (VTV): ETF Research Reports
Vanguard High Dividend Yield ETF (VYM): ETF Research Reports
