If you're interested in broad exposure to the Small Cap Growth segment of the US equity market, look no further than the Vanguard Russell 2000 Growth ETF (VTWG), a passively managed exchange traded fund launched on 09/22/2010.
The fund is sponsored by Vanguard. It has amassed assets over $255.91 M, making it one of the average sized ETFs attempting to match the Small Cap Growth segment of the US equity market.
Why Small Cap Growth
Small cap companies have market capitalization below $2 billion. They usually have higher potential than large and mid cap companies with stocks but higher risk.
Qualities of growth stocks include faster growth rates compared to the broader market, as well as higher valuations and higher than average sales and earnings growth rates. Further, growth stocks have a higher level of volatility associated with them. Compared to value stocks, growth stocks are a safer bet in a strong bull market, but don't perform as strongly in almost all other financial environments.
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.20%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 0.59%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Healthcare sector--about 25.80% of the portfolio. Information Technology and Industrials round out the top three.
Looking at individual holdings, Nektar Therapeutics Class A (NKTR) accounts for about 1.43% of total assets, followed by Grubhub Inc. (GRUB) and Sage Therapeutics Inc. (SAGE).
The top 10 holdings account for about 6.4% of total assets under management.
Performance and Risk
VTWG seeks to match the performance of the Russell 2000 Growth Index before fees and expenses. The Russell 2000 Growth Index measures the performance of those Russell 2000 companies with higher price/book ratios and higher predicted and historical growth rates.
The ETF has gained about 6.82% so far this year and was up about 21.03% in the last one year (as of 05/16/2018). In the past 52-week period, it has traded between $116.93 and $145.53.
The ETF has a beta of 1.14 and standard deviation of 17.10% for the trailing three-year period, making it a high risk choice in the space. With about 1194 holdings, it effectively diversifies company-specific risk.
Vanguard Russell 2000 Growth ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, VTWG is a sufficient option for those seeking exposure to the Small Cap ETFs area of the market. Investors might also want to consider some other ETF options in the space.
The Vanguard Small-Cap Growth ETF (VBK) and the iShares Russell 2000 Growth ETF (IWO) track a similar index. While Vanguard Small-Cap Growth ETF has $7.63 B in assets, iShares Russell 2000 Growth ETF has $10.01 B. VBK has an expense ratio of 0.07% and IWO charges 0.24%.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center .
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report GrubHub Inc. (GRUB): Free Stock Analysis Report ISHARS-RS 2K GR (IWO): ETF Research Reports VIPERS-SC GRWTH (VBK): ETF Research Reports VANGD-RUS 2000G (VTWG): ETF Research Reports Nektar Therapeutics (NKTR): Free Stock Analysis Report Sage Therapeutics, Inc. (SAGE): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research