5-Star ETFs Poised to Pop: Vanguard Small-Cap Value

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, the Vanguard Small-Cap Value ETF (NYSE: VBR  ) has earned a coveted five-star ranking.

With that in mind, let's take a closer look at Vanguard Small-Cap Value and see what CAPS investors are saying about the ETF right now.

Vanguard Small-Cap Value facts

Inception January 2004
Total Assets $1.69 billion
Investment Approach Seeks to track the performance of the MSCI US Small Cap Value Index, which is a broadly diversified index of value stocks of smaller U.S. companies.
Expense Ratio 0.23%
1-Year / 3-Year / 5-Year Return (7.1%) / 16.8% / (1.3%)
Top Holdings with High CAPS Rating (4 or 5 Stars) and Portfolio Weight BE Aerospace (Nasdaq: BEAV  ) (0.5%)
Ares Capital (Nasdaq: ARCC  ) (0.4%)
NCR (NYSE: NCR  ) (0.4%)
Dividend Yield 2%
Alternatives iShares Russell 2000 Value Index (NYSE: IWN  )
Rydex S&P SmallCap 600 Pure Value (NYSE: RZV  )

Sources: Morningstar and Motley Fool CAPS.

On CAPS, 99% of the 216 members who have rated Vanguard Small-Cap Value believe the ETF will outperform the S&P 500 going forward. These bulls include flyingcar and AccountantMike, who is ranked in the top 5% of our community.

Having gotten on board last year, flyingcar offered a rather simple reason to look into the ETF: "Small Cap Value historically does better over the long term."

Vanguard Small-Cap Value even sports a cheapish expense ratio of 0.23%. That's lower than that of other small-cap value ETFs like iShares Russell 2000 Value (0.40%) and Rydex S&P SmallCap 600 Pure Value (0.35%).

CAPS All-Star AccountantMike elaborates on the bull case:

As every good [F]ool should know, the Fama-French three- factor model predicts that an index of small cap stocks with a low price to book ratio will outperform the broader index over the long term. I strongly recommend that all you [F]ools out there read the works of Eugene Fama, Kenneth French, and Burton Malkiel ... in addition to the Buffett and Graham works recommended by everyone else.

What do you think about Vanguard Small-Cap Value, or any other ETF for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional ETFs is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!

Want to see how well (or not so well) the stocks in this series are performing? Follow the new TrackPoisedTo CAPS account.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.


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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 19, 2011, at 6:29 PM, 1caflash wrote:

    Brian, thanks for the article. I'm not well-versed about the aforementioned fund but I really like ARCC. This investment is in my DRIP. Happy Holidays!

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