Stick to the Fundamentals with the Value-Focused 'VTV'

As the value comeback story continues to play out in the capital markets, ETF investors can join in with funds like the Vanguard Value ETF (VTV).

VTV focuses primarily on large cap value stocks that add stability when markets are facing a downturn, while capturing upside when major indexes are flashing green. The fund offers a quarterly distribution that makes it an ideal fit for a fixed income portfolio.

“The final fund to consider if you’re seeking a low-risk investment with solid income-generating potential is the Vanguard Value ETF (VTV),” a Mooresville Tribune article said, noting four Vanguard funds that are ideal for income investors. “The fund tracks the CRSP U.S. Large Cap Value Index.”

“The index starts with stocks that make up the top 85% of the U.S. stock market by market capitalization,” the article added. “It then uses metrics such as the price-to-book ratio, earnings to price, and dividend-to-price ratio to identify value stocks which appear to be underpriced.”

The ETF:

  • Seeks to track the performance of the CRSP US Large Cap Value Index, which measures the investment return of large-capitalization value stocks.
  • Provides a convenient way to match the performance of many of the nation’s largest value stocks.
  • Follows a passively managed, full-replication approach.
  • Is up almost 40% within the last 12 months.

VTV Chart

Move Over Growth

For the past decade, growth has been on a tear. Now, in a year slated for economic healing, growth is making way for value.

When looking at major indexes like the S&P 500, isolating both factors tells the story of value’s comeback. The S&P 500 Value index is up 11% while the S&P 500 Growth index is up just tad over 1%.

This shift in factors certainly helps the case of VTV. In addition to its outperformance the past year, the fund is also up 11% for the year.

“Income investors tend to like value stocks, because they typically have stable revenue and earnings, and most pay dividends,” the article added further. “The fund contains a smorgasbord of over 300 holdings, which include familiar names like Johnson & Johnson, Berkshire Hathaway, JP Morgan Chase, Procter and Gamble, and UnitedHealth Group.”

^IVX Chart

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