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.
Next page: The latest news
The Latest News:
- “Investors are nowhere near as allocated into small-cap stocks as they should be,” Mark Matson, founder and CEO of Matson Money, said in a CNBC article. “There is an amazing bias towards large, blue-chip stocks. It’s human nature. We tend to be more comfortable with things we’re familiar with.”
- So far this year, investors have been embracing value stocks.
- Domestic value stock funds have attracted $7.9 billion in assets through April this year, compared to $8.2 billion in outflows for growth stock funds, reports Stan Choe for the Associated Press.
- “In the past two months there was an overwhelming preference for value over growth—it’s pretty dramatic to see a split like that,” David Santschi, chief executive of TrimTabs Investment Research, said in a Wall Street Journal article.
Vanguard Small-Cap Value ETF
For past stories in this series, visit our ETF Spotlight category.
Max Chen contributed to this article.