Should Vanguard Mid-Cap ETF (VO) Be on Your Investing Radar?
Designed to provide broad exposure to the Mid Cap Blend segment of the US equity market, the Vanguard Mid-Cap ETF (VO) is a passively managed exchange traded fund launched on 01/26/2004.
The fund is sponsored by Vanguard. It has amassed assets over $53.73 billion, making it one of the largest ETFs attempting to match the Mid Cap Blend segment of the US equity market.
Why Mid Cap Blend
Mid cap companies, with market capitalization in the range of $2 billion and $10 billion, offer investors many things that small and large companies don't, including less risk and higher growth opportunities. These types of companies, then, have a good balance of stability and growth potential.
Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.
Costs
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.04%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.62%.
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 Industrials sector--about 16.30% of the portfolio. Information Technology and Financials round out the top three.
Looking at individual holdings, Motorola Solutions Inc. (MSI) accounts for about 0.81% of total assets, followed by Dexcom Inc. (DXCM) and Amphenol Corp. (APH).
The top 10 holdings account for about 5.87% of total assets under management.
Performance and Risk
VO seeks to match the performance of the CRSP US Mid Cap Index before fees and expenses. The CRSP US Mid Cap Index targets inclusion of the U.S. companies that fall between the top 70%-85% of investable market capitalization.
The ETF has gained about 6.53% so far this year and was up about 6.72% in the last one year (as of 09/19/2023). In the past 52-week period, it has traded between $186.57 and $228.23.
The ETF has a beta of 1.09 and standard deviation of 19.30% for the trailing three-year period, making it a medium risk choice in the space. With about 341 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard Mid-Cap 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, VO is an outstanding option for investors seeking exposure to the Style Box - Mid Cap Blend segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Russell Mid-Cap ETF (IWR) and the iShares Core S&P Mid-Cap ETF (IJH) track a similar index. While iShares Russell Mid-Cap ETF has $28.37 billion in assets, iShares Core S&P Mid-Cap ETF has $72.64 billion. IWR has an expense ratio of 0.19% and IJH charges 0.05%.
Bottom-Line
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are 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 Mid-Cap ETF (VO): ETF Research Reports
Amphenol Corporation (APH) : Free Stock Analysis Report
DexCom, Inc. (DXCM) : Free Stock Analysis Report
Motorola Solutions, Inc. (MSI) : Free Stock Analysis Report
iShares Core S&P Mid-Cap ETF (IJH): ETF Research Reports
iShares Russell Mid-Cap ETF (IWR): ETF Research Reports
