ETF Spotlight on the Vanguard Mega Cap Value ETF (NYSEArca: MGV), part of an ongoing series.
Assets: $700.8 million
Objective: The Vanguard Mega Cap Value ETF tries to reflect the performance of the CRSP US Mega Cap Value Index, which tracks mega-capitalization stocks that represent the largest 70th percentile of the U.S. market and selects stocks with a value tilt
Holdings: Top holdings include the Exxon Mobile (NYSE: XOM) 5.4%, General Electric (NYSE: GE) 3.5%, Microsoft (NasdaqGS: MSFT) 3.4%, Johnson & Johnson 3.2% (NYSE: JNJ) Chevron Corp (NYSE: CVX) 2.9%.
What You Should Know:
- Vanguard Group sponsors the fund.
- MGV has a 0.11% expense ratio.
- The ETF has 157 components and the top ten holdings make up 31.7% of the overall portfolio.
- Sector allocations include basic materials 3.1%, consumer cyclical 3.8%, financials 22.7%, telecom services 4.4%, energy 13.7%, industrials 12.6%, tech 7.7%, consumer defensive 12.3%, healthcare 15.5% and utilities 4.4%.
- MGV has a 12-month yield of 2.29%.
- Capitalization weights include 58.1% mega-caps and 40.1% large-caps.
- The fund is down 0.5% over the past month, up 0.3% over the last three months and up 16.2% over the past year.
- The ETF tracks stocks based on value of book-to-price, forward an trailing earnings-to-price, dividend yield and sales-to-price.
- “Historically, value stocks have outperformed growth stocks in nearly every market studied over long horizons,” according to Morningstar analyst Alex Bryan. “While large-cap stocks tend to exhibit a smaller value premium than their small-cap counterparts, they also tend to be less risky.”
Next page: The latest news
The Latest News:
- With the repudiation of the momentum trade, value stocks and exchange traded funds are attracting more attention. [Very Valuable Value ETFs]
- “It is not surprising that sentiment is shifting away from some of the growth segments of the market,” writes Russ Koesterich, Managing Director, BlackRock Global Chief Investment Strategist. “Valuations for these industries are starting to appear stretched (particularly for biotech and social media companies), and investors are starting to seek better opportunities elsewhere—specifically in some of the more value-oriented areas.”
- As growth stocks falter, value investments and related exchange traded funds are beginning to pick up the slack, and the momentum trade-off could continue. [Value ETF Investments Still Have Room to Run]
- Value tends to continue its advantage over growth following strong value rallies,” Morgan Stanley strategist Adam Parker said in a note. “The value outperformance continues for 11 months following the value rally…Thus, the expectation that many investors we talked to last week have of a growth rebound following a run-up in value stocks is not borne out by history.”
- In the recent turn, growth stocks like technology and healthcare names have sold off while value companies in consumer staples and energy sectors could begin to lead the markets, Parker said.
Vanguard Mega Cap Value ETF
For past stories in this series, visit our ETF Spotlight category.
Max Chen contributed to this article.