A Broadly Diversified Value Portfolio at a Rock-Bottom Fee
A sizable cost advantage, low turnover, and well-diversified portfolio make Vanguard Value ETF one of the better options in the category.
Vanguard Value ETF (VTV) offers low-cost exposure to large-cap value stocks. Its sizable cost advantage, low turnover, and well-diversified portfolio make it one of the better options in the category.
The fund targets stocks representing the cheaper and slower-growing half of the U.S. large-cap market and weights them by market capitalization. This weighting approach promotes low turnover and skews the portfolio toward the largest value stocks, giving the fund a larger market-cap orientation than most of its peers. But the biggest stocks are not necessarily the cheapest. Market-cap weighting can actually reduce the portfolio's exposure to stocks as they become cheaper, as this typically accompanies a decline in market capitalization. The portfolio's largest holdings include mature names such as Exxon Mobil (XOM), Microsoft (MSFT), and Johnson & Johnson (JNJ). These large-cap stocks may offer lower return potential than smaller stocks, but they also tend to be less risky.
Alex Bryan has a position in the following securities mentioned above: VLUE. Find out about Morningstar’s editorial policies.