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Launched on 12/17/2007, the Vanguard Mega Cap Value ETF (MGV) is a passively managed exchange traded fund designed to provide a broad exposure to the Large Cap Value segment of the US equity market.

The fund is sponsored by Vanguard. It has amassed assets over $7.33 billion, making it one of the larger ETFs attempting to match the Large Cap Value segment of the US equity market.

Why Large Cap Value

Large cap companies usually have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.

Value stocks have lower than average price-to-earnings and price-to-book ratios. They 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.

Costs

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 0.07%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 2.38%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Financials sector--about 23% of the portfolio. Healthcare and Industrials round out the top three.

Looking at individual holdings, Berkshire Hathaway Inc (BRK/B) accounts for about 4.11% of total assets, followed by Broadcom Inc (AVGO) and Jpmorgan Chase & Co (JPM).

The top 10 holdings account for about 28.41% of total assets under management.

Performance and Risk

MGV seeks to match the performance of the CRSP U.S. Mega Cap Value Index before fees and expenses. The CRSP U.S. Mega Cap Value Index is a float-adjusted, market-capitalization-weighted index designed to measure equity market performance of mega-capitalization value stocks in the United States.

The ETF has added roughly 8.82% so far this year and is up about 19.83% in the last one year (as of 06/06/2024). In the past 52-week period, it has traded between $97.07 and $120.34.

The ETF has a beta of 0.85 and standard deviation of 13.85% for the trailing three-year period, making it a medium risk choice in the space. With about 143 holdings, it effectively diversifies company-specific risk.

Alternatives

Vanguard Mega Cap 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, MGV is an outstanding 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 $55.30 billion in assets, Vanguard Value ETF has $115.18 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.

Bottom-Line

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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Vanguard Mega Cap Value ETF (MGV): ETF Research Reports

JPMorgan Chase & Co. (JPM) : Free Stock Analysis Report

Broadcom Inc. (AVGO) : Free Stock Analysis Report

Vanguard Value ETF (VTV): ETF Research Reports

iShares Russell 1000 Value ETF (IWD): ETF Research Reports

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.