Thoughts on Vanguard Value ETF (VTV)

[Still Learning]

Thinking to make an initial small investment in this domestic stock ETF fund (https://investor.vanguard.com/invest...fs/profile/vtv) that falls within the Large, Value sector. Low cost at 0.04% with larger investments in consumer staples, financials, health and industrials. Compared to many funds it did okay in 2022 with a loss of -2% and more recent results vasilating with the market. Longer term results averaged +8.41% back to inception in 2004, not stellar perhaps but decent term results.



Thoughts?

[Sunset]

Go ahead.

I think since nobody can predict over the long term what happens, just pick a number of various funds.

I have all of these and other things.

VTV
VTI
SCHD
VOO

Key I think is having ETF's that have low expense rates.

The only thing I would suggest, having been burned by the Bond fund drop it to buy bonds directly , ie treasury bills, TIPs, i-bonds, bank bonds, etc.

[RetMD21]

Value investors have to be patient You can't beat the ER and the total return in 2022 was good. The turnover is 8.9% which is a little high for an index fund/ETF. The page at Vanguard would only let me see the first of 6 pages about distributions. I worry about taxable capital gain distributions

[MercyMe]

SCHD has a good track record, but the track record isn't very long. Throughout its relatively short life, it has slightly outperformed VTV with higher return and lower volatility. Even though it resides in the large value part of the equity fund style box, its stock overlap is only 14% of VTV. To me, SCHD seems like a more focused large cap value fund. In other words it lacks the diversification of VTV. I could be wrong but I think SCHD also has a bit more large cap growth stocks in it than VTV which might contribute to the out-performance and reduced volatility.

But I don't think you could go wrong with VTV or SCHD (probably would not buy both). Value funds in general though seem to be waiting for their heyday.

[VanWinkle]

Quote:

Originally Posted by Still Learning Thinking to make an initial small investment in this domestic stock ETF fund (https://investor.vanguard.com/invest...fs/profile/vtv) that falls within the Large, Value sector. Low cost at 0.04% with larger investments in consumer staples, financials, health and industrials. Compared to many funds it did okay in 2022 with a loss of -2% and more recent results vasilating with the market. Longer term results averaged +8.41% back to inception in 2004, not stellar perhaps but decent term results. Thoughts?

I would pick a low cost Growth fund that lost 34-35% last year. The chances of it performing better than the Value fund that had a good year last year seem better. VIGAX is the Vanguard growth index and I'm sure there is an ETF available. YMMV

[OverThinkMuch]

I find it amusing that Schwab's Dividend ETF (SCHD) has a higher value tilt than Vanguard's "Value" ETF (VTV). Click "weight" on the graph, and compare the value total to the growth total.

https://www.morningstar.com/etfs/arcx/schd/portfolio
https://www.morningstar.com/etfs/arcx/vtv/portfolio

Note that Vanguard Value (VTV) was up 2% last year, while iShares MSCI USA Value Factor ETF (VLUE) fell 14%. I would dig into that difference before I invested in either fund. I think VTV benefitted heavily from large energy companies, and you may not seen that repeat. VLUE had a 1/4th technology weight (Intel, AT&T, ...) which was hit heavily by semiductor losses. Comparing them can help you see why their performance was so far apart. They might not have a 16% gap this year.
https://www.morningstar.com/etfs/bats/vlue/portfolio

[Still Learning]

Thank you for everyone's responses.


OverThinkMuch- Energy was only 8.4% of the portfolio so probably a smaller influence on last year's performance. Technology at only 6.4% last year probably helped. Hopefully having faired better than many last year it will perform well when the economy improves.

[Lsbcal]

Quote:

Originally Posted by Still Learning Thinking to make an initial small investment in this domestic stock ETF fund (https://investor.vanguard.com/invest...fs/profile/vtv) that falls within the Large, Value sector. Low cost at 0.04% with larger investments in consumer staples, financials, health and industrials. Compared to many funds it did okay in 2022 with a loss of -2% and more recent results vasilating with the market. Longer term results averaged +8.41% back to inception in 2004, not stellar perhaps but decent term results. Thoughts?

This all depends on how VTV fits into your investment approach and your total portfolio. VTV is fine for exposure to large cap value and I own it currently along with VBR and VOE. But I am not a buy-hold investor.

Yes, the value stocks performed relatively well in 2022. No way to know if this will continue. VBR and VOE are well below their 2011 PE's whereas VTV's PE is about the same as it was in 2011. Large growth VUG is 50& higher in PE then in 2011.

I recently noticed that the SP500 is still very biased towards technology. That is a situation that did not really exist prior to late 2020. Looking at a combo of VTV and VUG, I found that for my purposes they did not perform as well as the SP500. I have no idea whether or not the tech bias of the SP500 is a good thing or not.

[OverThinkMuch]

Quote:

Originally Posted by Still Learning Thank you for everyone's responses. OverThinkMuch- Energy was only 8.4% of the portfolio so probably a smaller influence on last year's performance. Technology at only 6.4% last year probably helped. Hopefully having faired better than many last year it will perform well when the economy improves.

You need to multiply weight times performance. Johnson & Johnson and Exxon have about the same weight in VTV, but JNJ was +3.50% in 12 months compared to XOM returning +62.63%. Exxon contributed 18x more to VTV's returns compared to another stock of similar weight, so consider the magnitude of energy's performance as well.

[thepalmersinking]

Quote:

Originally Posted by Sunset Go ahead. I think since nobody can predict over the long term what happens, just pick a number of various funds. I have all of these and other things. VTV VTI SCHD VOO Key I think is having ETF's that have low expense rates. The only thing I would suggest, having been burned by the Bond fund drop it to buy bonds directly , ie treasury bills, TIPs, i-bonds, bank bonds, etc.

Add VYM

[VanWinkle]

Quote:

Originally Posted by Sunset Go ahead. I think since nobody can predict over the long term what happens, just pick a number of various funds. I have all of these and other things. VTV VTI SCHD VOO Key I think is having ETF's that have low expense rates. The only thing I would suggest, having been burned by the Bond fund drop it to buy bonds directly , ie treasury bills, TIPs, i-bonds, bank bonds, etc.

Your strategy seems complicated to me, but I'm glad it works for you.

VW

[matjung]

Quote:

Originally Posted by Still Learning Thinking to make an initial small investment in this domestic stock ETF fund (https://investor.vanguard.com/invest...fs/profile/vtv) that falls within the Large, Value sector. Low cost at 0.04% with larger investments in consumer staples, financials, health and industrials. Compared to many funds it did okay in 2022 with a loss of -2% and more recent results vasilating with the market. Longer term results averaged +8.41% back to inception in 2004, not stellar perhaps but decent term results. Thoughts?

I would consider it as a good first investment.
When expectations are not high, the fund won't let you down.