On Thursday, we explored the resurgence of the value as it pertains to exchange traded funds, including the Vanguard Value ETF (NYSEArca: VTV). VTV follows the tracks the CRSP US Large Cap Value Index and is one of the most widely followed value ETFs.
CRSP includes sales/price and historical earnings/price ratio as well as 12-month forward earnings/price ratio and dividend yield to form its value indexes.
Plain vanilla index ETFs that track the value theme has outperformed so far this year, or at least have not done as poorly as broader benchmarks. Nevertheless, potential investors should still look under the hood of these value stock ETFs as no two are created alike and offer varying performances.
As is the case with so many Vanguard ETFs, VTV has gained a following due to its paltry expense ratio. VTV charges just 0.09% per year, making it less than expensive than 92% of competing funds, according to issuer data.
Investors mulling new positions in VTV should be mindful of the ETF’s recent upside move, which has it bumping up against what could be some stiff resistance.
“While there is a little more room to the upside, the descending trendline and 200-day moving averages are likely to prevent the longer-term trend from reversing. Investors with a long-term view may want to wait on the sidelines for several weeks to see how the price reacts once it tests the resistance levels,” according to Investopedia.
On the other hand, VTV’s recent strength confirms the notion that market uncertainty often prompts investors to embrace value stocks. That sentiment could bode for higher near-term returns for VTV and rival value ETFs.
VTV will need some help from some beaten-up sectors to grind higher, notably financial services. This year’s worst-performing sector is VTV’s largest sector weight at 22.2%, well ahead of second-place healthcare within the fund.
Vanguard Value ETF
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.