Investors looking for yield & value with a basket of companies under one ticker can consider the Vanguard Value ETF (VTV). The fund pays a dividend of 2.62% and has a low expense ratio of 0.10%. By owning VTV, investors take ownership in a total of 462 stocks. This significantly reduces individual price risk as money is spread among a wide variety of companies.
The VTV ETF seeks to track the performance of MSCI US Prime Market Value Index, which measures the investment return of large-cap value stocks. This is a passively managed, full replication approach which allows for such a low expense ratio. The expense ratio is 92% lower than the average expense ratio of funds with similar holdings.
Here is a breakdown of the Vanguard Value Fund by sector:
More than half of the fund is comprised of the financial, energy, and healthcare sectors. The financial sector has a trailing PE ratio of 13 as indicated by the Financial Select Sector SPDR (XLF). The energy sector has an even lower trailing PE of 12 as indicated by the Energy Select Sector SPDR (XLE). The trailing PE ratio of 16 for the healthcare sector (XLV) is a bit higher at 16. However, the forward PE ratios of the top healthcare stocks in the fund average about 12. The trailing PE ratio for VTV is 13. This is lower than the trailing PE ratio of the S&P 500 (SPY) which stands at 14.
Here's a comparison of the top 5 holdings in the fund:
General Electric (GE)
Procter & Gamble (PG)
% of fund
The VTV ETF achieved an annual return of 15.68% for the past year and 9.75% for the last three years. Since inception in January 2004, the fund produced an annual return of 4.42%.
Many of the stocks in the fund could be considered boring to some investors as compared to high-growth stocks. However, the value fund may appeal to investors who want less volatility than growth stocks or the overall market. With a decent dividend yield and a collection of stocks trading at a lower valuation than the S&P 500, the Vanguard Value ETF has its place in the investment world.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.