ETF Spotlight on the Vanguard Small-Cap Value ETF (NYSEArca: VBR), part of an ongoing series.

Assets: $4.3 billion

Objective: The Vanguard Small-Cap Value fund tries to reflect the performance of the CRSP US Small-Cap Value Index, which is comprised of small-cap stocks that represent the 85th to 95th largest percentile of the U.S. stock market.

Holdings: Top holdings include Hanesbrands (NYSE: HBI) 0.6%, Rite Aide (NYSE: RAD) 0.5%, Arthur J. Gallagher & Co (NYSE: AJG) 0.5%, Foot Locker (NYSE: FL) 0.5% and Snap-on Inc. (NYSE: SNA) 0.5%.

What You Should Know:

  • The Vanguard Group sponsors the fund.
  • VBR has a 0.09% expense ratio.
  • The ETF has 805 holdings and the top ten components make up 4.6% of the overall portfolio.
  • Sector allocations include basic materials 7.5%, consumer discretionary 13.8%, financials 18.5%, real estate 9.6%, telecom 0.7%, energy 4.7%, industrials 18.2%, tech 10.0%, consumer staples 4.1%, health care 6.5% and utilities 6.2%.
  • The ETF’s stock portfolio shows a price-to-earnings ratio of 16.4 and a price-to-book of 1.7.
  • The fund is up 2.2% over the past month, up 3.1% over the past three months and up 5.8% year-to-date.
  • VBR is currently trading 7.2% above its 200-day exponential moving average.
  • The ETF has a 1.8% 12-month yield.
  • Small-capitalization value stocks have historically been the best performing asset category in the U.S. stock market.
  • “However, this fund is not for the faint of heart,” according to Morningstar analyst Alex Bryan. “Few of its holdings enjoy durable competitive advantages. As a result, their earnings may come under pressure when times are hard. Small-cap stocks are more highly leveraged to the fortunes of the domestic economy than their large-cap counterparts and tend to be more volatile.”
  • The underlying CRSP index employs specific  value and growth scores to each stock before selecting component holdings.
  • The growth factors include projected EPS growth, three-year historical earnings and sales per share growth, current investment and return on assets.
  • The value factors include book-to-price, earnings-to-price, sales-to-price and dividends.
  • Growth stocks are considered more risky and value stocks are seen as a bit more expensive but less volatile.

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