Designed to provide broad exposure to the Mid Cap Value segment of the US equity market, the Vanguard S&P MidCap 400 Value ETF (IVOV) is a passively managed exchange traded fund launched on 09/09/2010.
The fund is sponsored by Vanguard. It has amassed assets over $828.40 million, making it one of the average sized ETFs attempting to match the Mid Cap Value segment of the US equity market.
Why Mid Cap Value
With market capitalization between $2 billion and $10 billion, mid cap companies usually contain higher growth prospects than large cap companies, and are considered less risky than their small cap counterparts. Thus they have a nice balance of growth potential and stability.
While value stocks have lower than average price-to-earnings and price-to-book ratios, they also have lower than average sales and earnings growth rates. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. They are however likely to underperform growth stocks in strong bull markets.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.15%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.81%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Financials sector--about 21% of the portfolio. Industrials and Real Estate round out the top three.
Looking at individual holdings, Jones Lang Lasalle Inc. (JLL) accounts for about 1.01% of total assets, followed by Steel Dynamics Inc. (STLD) and East West Bancorp Inc. (EWBC).
The top 10 holdings account for about 7.33% of total assets under management.
Performance and Risk
IVOV seeks to match the performance of the S&P MidCap 400 Value Index before fees and expenses. The S&P MidCap 400 Value Index measures the performance of value stocks of medium-size U.S. companies.
The ETF has lost about -2.36% so far this year and is up about 21.33% in the last one year (as of 01/20/2022). In the past 52-week period, it has traded between $133.07 and $174.89.
The ETF has a beta of 1.25 and standard deviation of 29.03% for the trailing three-year period, making it a medium risk choice in the space. With about 310 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard S&P MidCap 400 Value ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, IVOV is an outstanding option for investors seeking exposure to the Style Box - Mid Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Russell MidCap Value ETF (IWS) and the Vanguard MidCap Value ETF (VOE) track a similar index. While iShares Russell MidCap Value ETF has $14.89 billion in assets, Vanguard MidCap Value ETF has $15.80 billion. IWS has an expense ratio of 0.23% and VOE charges 0.07%.
Bottom-Line
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.
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Vanguard S&P MidCap 400 Value ETF (IVOV): ETF Research Reports
Steel Dynamics, Inc. (STLD): Free Stock Analysis Report
Jones Lang LaSalle Incorporated (JLL): Free Stock Analysis Report
East West Bancorp, Inc. (EWBC): Free Stock Analysis Report
Vanguard MidCap Value ETF (VOE): ETF Research Reports
iShares Russell MidCap Value ETF (IWS): ETF Research Reports
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Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
