The Vanguard Value ETF (VTV 0.63%) is a popular choice for investors looking to focus on large-cap value stocks.
While value investing often brings to mind picking individual, mispriced stocks, another approach is to take it in aggregate: building a diversified portfolio of stocks that are, on average, undervalued compared to the broader market.
This strategy draws from the research of Eugene Fama and Kenneth French, who identified the "value factor" as a key driver of long-term outperformance. The Vanguard Value ETF offers a simple way to target this factor with a broad portfolio of large-cap companies.
Here’s how this ETF works and what you should know before adding it to your portfolio.
Exchange-Traded Fund (ETF)
What is the Vanguard Value ETF (VTV)?
What is the Vanguard Value ETF (VTV)?
Vanguard's ETF is a passive ETF that aims to replicate the CRSP US Large Cap Value Index. This benchmark selects stocks from the largest 85% of companies in the CRSP US Total Market Index.
Eligible companies are screened using a variety of metrics, including price-to-book, price-to-forward earnings, price-to-historical earnings, price-to-dividend, and price-to-sales ratios, ensuring a focus on undervalued stocks.
The selected stocks are weighted by free-float market capitalization, meaning only the publicly available shares contribute to the stock’s weight in the index. This approach ensures larger, more liquid stocks dominate.
The index is rebalanced (adjusting the weights of existing holdings) and reconstituted (adding or removing stocks) quarterly.
How to buy
How to buy the Vanguard Value ETF (VTV)
Here’s how to buy VTV step by step:
- Open your brokerage app: Log into your brokerage account where you handle your investments.
- Search for the ETF: Enter the ticker symbol "VTV" or the ETF’s name into the search bar to bring up its trading page.
- Decide how many shares to buy: Think about your investment goals and how much of your portfolio you want to allocate to the ETF.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you’re willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure the order was filled as expected and adjust your investment strategy if needed.
Holdings
Holdings of the Vanguard Value ETF (VTV)
This ETF's portfolio currently holds 336 U.S. stocks, with a median market cap of $129 billion, giving it a clear large-cap tilt. The fund falls into the "large value" style.
Compared to the S&P 500, the ETF holds stocks with lower price-to-earnings (P/E) and price-to-book (P/B) ratios of 20.2x and 2.8x, respectively, making it a more value-oriented portfolio.
On average, its holdings boast an 11.3% earnings growth rate and a 16.1% return on equity (ROE), providing a quality tilt in addition to its value focus.
Sector-wise, this ETF emphasizes "old economy" industries, with financials (21%), healthcare (16.6%), and industrials (15.8%) taking the largest weights.
Its top holdings feature a mix of well-known, value-oriented blue-chip stocks:
Should I invest?
Should I invest in the Vanguard Value ETF (VTV)?
This Vanguard ETF is an excellent choice for beginner value investors who want to stay highly diversified and avoid the challenges of picking individual value stocks. It’s also a great fit for those looking to add a long-term value tilt to a broader ETF portfolio without taking on significant risk.
However, if you’re an experienced value investor, this ETF might feel too broad. Its screening criteria may not provide the deep exposure to undervalued stocks that some investors prefer, and it lacks a focus on smaller value stocks that could offer higher returns over time.
Dividend
Does the the Vanguard Value ETF (VTV) pay a dividend?
Yes, it currently pays an above-average dividend with a 2.04% 30-day SEC yield. Dividends are distributed quarterly.
Expense Ratio
Expense ratio
What is the Vanguard Value ETF (VTV)'s expense ratio?
This ETF has an expense ratio of 0.04%, which means you’ll pay just $4 annually for every $10,000 you invest. This fee isn’t paid upfront; instead, it’s gradually deducted over the year on the back end.
Historical performance
Historical performance of the Vanguard Value ETF (VTV)
Here's a look at the annualized total returns (i.e. with dividends reinvested) over various historical periods.
| 1-Year | 3-Year | 5-Year | 10-Year | |
|---|---|---|---|---|
| VTV Market Price | 30.07% | 12.32% | 11.97% | 10.76% |
| VTV NAV | 30.00% | 12.30% | 11.97% | 10.75% |
Related investing topics
The bottom line
The bottom line on the Vanguard Value ETF (VTV)
The Vanguard Value ETF offers a low-cost, highly diversified way to gain instant exposure to U.S. blue-chip value stocks. However, it won’t provide deep value exposure or include mid- and small-cap value stocks. Think of it as a convenient replacement for picking individual value stocks or as a simple way to add a value tilt to your broader portfolio.
Investing in the Vanguard Value ETF (VTV) FAQs
Is VTV ETF a good buy?
VTV could be a good buy for beginner or long-term passive investors looking to add a diversified, inexpensive value tilt to their portfolio.
Is VTV better than VOO?
VTV is better than VOO when it comes to value exposure, but VOO beats it in terms of fees, diversification, and historical performance.
How to purchase a Vanguard ETF?
Visit Vanguard's website to find their full lineup and then search for the ETF you want to invest in on your brokerage platform.
Does VTV pay dividends?
VTV pays dividends on a quarterly basis. As of November 30, 2024, it has a 2.04% 30-day SEC yield.
