ETF Spotlight on the Vanguard Mid-Cap Value ETF (NYSEArca: VOE), part of an ongoing series.
Assets: $2.4 billion
Objective: The Vanguard Mid-Cap Value ETF tries to reflect the performance of the CRSP US Mid Cap Value Index, which is comprised of middle capitalization company stocks with a value tilt.
Holdings: Top holdings include Macy’s Inc (NYSE: M) 1.3%, Western Digital Corp. (NasdaqGS: WDC) 1.3%, Delphi Automotives (NYSE: DLPH) 1.2%, Boston Scientific (NYSE: BSX) 1.2% and Mylan Inc. (NasdaqGS: MYL) 1.2%.
What You Should Know:
- The Vanguard Group sponsors the fund.
- VOE has a 0.10% expense ratio.
- The ETF includes 204 components, and the top ten make up 11.3% of the overall portfolio.
- Sector allocations include basic materials 6.8%, consumer cyclical 15.1%, financial services 17.2%, real estate 4.0%, telecom services 0.6%, energy 6.0%, industrials 12.8%, technology 9.8%, consumer defensive 9.2%, healthcare 9.2% and utilities 9.4%.
- Market capitalization breakdown includes 15.3% large-caps and 84.7% mid-caps, according to Morningstar data.
- The portfolio has a price-to-earnings ratio of 15.14.
- VOE is up 3.8% over the past month, up 2.4% year-to-date and up 25.6% over the past year.
- Value stocks trade at a lower relative price to fundamentals, such as dividends earnings, sales, book value, among others, so value investors believe these types of stocks are poised to normalize or rise in the near future.
- Most value stocks exhibit similar traits, such as high dividend yields, low price-to-book or low price-to-earnings.
- “Value stocks have historically outperformed their growth counterparts in nearly every market studied over long time horizons,” according to Morningstar analyst Alex Bryan. “This premium tends to increase as market capitalization decreases.”
- “Value stocks tend to represent companies with high business risk, low profitability, and poor growth prospects,” Bryan added. “Yet, investors often penalize these companies too much by extrapolating recent performance too far into the future. This myopic focus can push prices below their fair values. Consequently, value stocks have generated better risk-adjusted returns than the market over the long run.”
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