Looking for broad exposure to the Large Cap Value segment of the US equity market? You should consider the iShares S&P 500 Value ETF (IVE), a passively managed exchange traded fund launched on 05/22/2000.
The fund is sponsored by Blackrock. It has amassed assets over $24.29 billion, making it one of the largest ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Large cap companies typically have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.
Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.18%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 2%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Healthcare sector–about 16.80% of the portfolio. Industrials and Financials round out the top three.
Looking at individual holdings, Berkshire Hathaway Inc Class B (BRKB) accounts for about 2.96% of total assets, followed by Johnson & Johnson (JNJ) and Exxon Mobil Corp (XOM).
The top 10 holdings account for about 18.45% of total assets under management.
Performance and Risk
IVE seeks to match the performance of the S&P 500 Value Index before fees and expenses. The S&P 500 Value Index measures the performance of the large capitalization value sector of the U.S. equity market. It is a subset of the S&P 500 and consists of those stocks in the S&P 500 exhibiting the strongest value characteristics.
The ETF has lost about -6.89% so far this year and is down about -1.08% in the last one year (as of 09/12/2022). In the past 52-week period, it has traded between $133.27 and $159.06.
The ETF has a beta of 0.93 and standard deviation of 23.53% for the trailing three-year period, making it a medium risk choice in the space. With about 450 holdings, it effectively diversifies company-specific risk.
IShares S&P 500 Value ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, IVE is an excellent option for investors seeking exposure to the Style Box – Large Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Russell 1000 Value ETF (IWD) and the Vanguard Value ETF (VTV) track a similar index. While iShares Russell 1000 Value ETF has $53.22 billion in assets, Vanguard Value ETF has $99.77 billion. IWD has an expense ratio of 0.18% and VTV charges 0.04%.
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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iShares S&P 500 Value ETF (IVE): ETF Research Reports
Johnson & Johnson (JNJ) : Free Stock Analysis Report
Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
Vanguard Value ETF (VTV): ETF Research Reports
iShares Russell 1000 Value ETF (IWD): ETF Research Reports
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