Vanguard Small-Cap Value Index Fund ETF Shares (VBR)

ETF Vanguard Small-Cap Value Index Fund ETF Shares (VIOV)

Profile

Focus: VIOV invests in small-cap U.S. stocks with a value tilt. This means the fund primarily focuses on stocks of smaller companies that are considered undervalued by the market.

Asset Allocation: The fund's portfolio is primarily composed of stocks (over 99%), with a small allocation to cash and other assets.

Investment Strategy: VIOV tracks the CRSP US Small Cap Value Index, which measures the performance of small-cap value stocks. The fund employs a passive management style, replicating the holdings and weights of the underlying index.

Objective

The primary objective of VIOV is to provide long-term capital appreciation by tracking the performance of the CRSP US Small Cap Value Index.

Issuer

Vanguard:

• Reputation and Reliability: Vanguard is one of the largest and most reputable investment firms globally, known for its low-cost index funds and commitment to investor interests.
• Management: The fund is managed by an experienced team with a deep understanding of the small-cap value space.

Market Share

VIOV is one of the largest small-cap value ETFs, with a significant market share in the sector.

Total Net Assets

As of October 26, 2023, VIOV has total net assets of over $20 billion.

Moat

Competitive Advantages:

• Low Expense Ratio: VIOV has a low expense ratio of 0.07%, making it one of the most cost-effective options in its category.
• Diversification: The fund provides broad exposure to the small-cap value space, reducing concentration risk.
• Passive Management: VIOV's passive management approach minimizes tracking error and management fees.

Financial Performance

Historical Performance: VIOV has historically outperformed its benchmark index, delivering strong returns over various timeframes.

Benchmark Comparison: The fund has consistently outperformed the Russell 2000 Value Index, its primary benchmark.

Growth Trajectory

The small-cap value space is expected to continue its growth trajectory, driven by strong economic fundamentals and potential for value appreciation.

Liquidity

Average Trading Volume: VIOV has a high average trading volume, ensuring easy entry and exit for investors. Bid-Ask Spread: The fund has a tight bid-ask spread, indicating low trading costs.

Market Dynamics

Factors Affecting Market Environment:

• Economic Growth: A strong economy favors small-cap stocks, as these companies tend to benefit disproportionately from economic expansion.
• Interest Rates: Rising interest rates can impact small-cap value stocks, making them less attractive compared to other asset classes.
• Investor Sentiment: Overall market sentiment can influence the performance of small-cap value stocks.

Competitors

Key competitors include iShares S&P Small-Cap 600 Value Index ETF (IJS) and Schwab Small-Cap Value Index ETF (SVAL).

Expense Ratio

VIOV has an expense ratio of 0.07%.

Investment Approach and Strategy

Strategy: Passive, tracking the CRSP US Small Cap Value Index. Composition: Primarily small-cap value stocks, with minimal exposure to other asset classes.

Key Points

• Low-cost access to the small-cap value market.
• Broad diversification across numerous small-cap value stocks.
• Strong historical performance and potential for future growth.
• High liquidity and tight bid-ask spread.

Risks

Volatility: Small-cap stocks are inherently more volatile than larger-cap stocks, leading to potential price fluctuations. Market Risk: The fund's performance is tied to the performance of the small-cap value market, which can be affected by various macroeconomic and market-specific factors.

Who Should Consider Investing

VIOV is suitable for investors seeking long-term capital appreciation and are comfortable with the higher volatility associated with small-cap stocks. The fund aligns well with investors building a diversified portfolio and seeking value exposure within the small-cap space.

Fundamental Rating Based on AI

8/10: VIOV's low expense ratio, strong historical performance, and broad diversification make it an attractive option for investors seeking exposure to the small-cap value space. However, investors should be mindful of the higher volatility associated with small-cap stocks.

Resources and Disclaimers

Sources:

• Vanguard Website
• Yahoo Finance
• Morningstar

Disclaimer: This analysis is for informational purposes only and should not be considered financial advice. Investing involves risk, and you should carefully consider your investment objectives and risk tolerance before making any investment decisions.