Looking for broad exposure to the small-cap blend segment of the U.S. equity market? Check out the Vanguard S&P Small-Cap 600 ETF (VIOO – Free Report) is a passively managed exchange-traded fund that was launched on September 9, 2010.
This fund is sponsored by Vanguard. Amassing over $2.28 billion in assets, he is one of the largest her ETFs to rival the small cap blended segment of the US stock market.
Why Choose Small Cap Blend?
Small-cap companies have a market capitalization of less than $2 billion. They typically have higher potential than large and mid-cap companies that hold equity but are more risky.
Blended ETFs typically hold a mix of growth and value stocks, and stocks that exhibit both value and growth stocks.
cost
All other factors being equal, it is important for investors to pay attention to the ETF’s expense ratio, as cheaper funds tend to produce better results than more expensive funds.
With an annual operating fee of 0.10%, this ETF is one of the cheapest offerings in the industry.
The 12-month trailing dividend yield is 1.40%.
Sector exposure and top holdings
ETFs offer diversified exposure, thus minimizing single-stock risk, but it is still important to delve into fund holdings before investing. Most ETFs are highly transparent products. and many disclose their holdings daily.
This ETF has the largest allocation to the financial sector, at approximately 17.30% of the portfolio. The top three positions are rounded out by Industrial and Consumer Discretionary.
Looking at individual holdings, Agree Realty Corp. (ADCs – Free Report) accounted for approximately 0.60% of total assets, followed by Helmerich & Payne Inc. (HP – Free report) and Exponent Co., Ltd. (exposition – free report).
The top 10 stocks account for approximately 4% of total assets under management.
performance and risk
VIOO seeks to match the pre-fees and expenses performance of the S&P SmallCap 600 Index. The S&P SmallCap 600 Index represents the small-cap segment of the U.S. equity market.
The ETF is up about 8.05% so far this year and is up about 1.12% over the past year (as of January 30, 2023). Over the past 52 weeks, it has traded between $161.22 and $203.90.
The ETF’s beta is 1.13, with a standard deviation of 31.45% over the past three years, making it a medium-risk option in this space. Approximately 604 holdings effectively diversify company-specific risks.
Alternative proposal
The Zacks ETF Rank for the Vanguard S&P Small-Cap 600 ETF is 2 (Buy). This is based on factors such as expected returns, expense ratios and momentum for the asset class. This makes VIOO an excellent option for investors seeking exposure to the Style Box – Small Cap Blend segment of the market. There are other additional ETFs in the space that investors can consider as well.
iShares Russell 2000 ETF (IWM – Free Report) and the iShares Core S&P Small Cap ETF (IJR – Free Report) tracks similar indexes. The iShares Russell 2000 ETF has $54.76 billion in assets, while the iShares Core S&P Small-Cap ETF has $70.32 billion in assets. IWM’s expense ratio is 0.19% and IJR’s fee is 0.06%.
bottom line
Increasingly popular among retail and institutional investors, passively managed ETFs offer low cost, transparency, flexibility and tax benefits. It is also an excellent vehicle for long-term investors.
Visit the Zacks ETF Center to learn more about this and other ETFs, select products that match your investment objectives, and read articles on the latest developments in the ETF investment universe.
