A sound investment process and strong management team underpin Vanguard S&P 500 Value ETF's Morningstar Medalist Rating of Silver. The portfolio maintains a sizable cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The strategy merits an Above Average Process Pillar rating. The strategy’s management team earns an Above Average People Pillar rating. The strategy's parent organization earns the firm a High Parent Pillar rating. People, Process and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

Microsoft

Amazon

Berkshire Hathaway Inc. - Ordinary Shares - Class B

JPMorgan Chase & Co

Cisco Systems

Walmart

salesforce.com

Bank of America

Comcast

The fund accurately captures the opportunity set available to its Morningstar Category peers. The fund's sector allocations did not deviate from the category average by more than 7% as of March 2023. However, the fund’s sector allocations changed toward the end of 2022. Compared with its average peer, the fund now overweights technology and consumer cyclicals stocks by 6 and 3 percentage points, respectively, while underweighting healthcare and energy stocks. When calculating stocks' growth scores, the index considers their momentum over the trailing 12 months. Cheaper companies can meet the momentum criteria during value rallies, as happened in 2022 when value stocks were among the bear market's most resilient . The S&P index rebalanced in December 2022, and SPDR Portfolio S&P 500 Value ETF SPYV increased its exposure to newly undervalued sectors like tech and consumer discretionary, while its sister SPDR S&P 500 Growth ETF SPYG sold those stocks. However, such changes in the portfolio should wash out as valuations mean-revert over the long run.

The fund also holds names with higher valuations that don’t qualify as growth stocks. They can temper the fund’s value exposure and provide a modest buffer when value stocks underperform. Companies like JPMorgan Chase JPM and newly undervalued technology stocks such Amazon.com AMZN and Meta Platforms META fit this description. Additionally, the fund shares about one third of its portfolio with SPDR S&P 500 Growth ETF SPYG. 

The fund has historically traded at similar valuations to its average peer. However, the fund’s portfolio comes with higher valuations than peers after its recent rebalance into technology and consumer cyclicals. However, the fund is better diversified than its average peer. The top 10 holdings constitute 21% of the portfolio, which is 10 percentage points lower than the category average as of March 2023.

Like many of its large-value peers, the fund carries persistent sector biases versus the broader market. Compared with the Russell 1000 Index, the fund tilts into financials and industrials stocks while underweighting technology and healthcare stocks, as of March 2023.

Note: The Process Pillar rating and analysis are indirectly assigned by an analyst. When an analyst covers a passively managed vehicle that tracks a particular index, Morningstar associates the Process Pillar rating assigned to that vehicle with the index concerned. Morningstar then maps the Process Pillar associated with a given index to any other uncovered passive strategies that track the same index. This ensures that the analyst’s view is leveraged whenever available and promotes consistency when analyzing passive vehicles associated with a given index.

Above Average

Process

Vanguard S&P 500 Value Index Fund benefits considerably from its equity team, earning it an Above Average People Pillar rating. There are three managers listed on the fund: Donald Butler, Michelle Louie, Kenny Narzikul. The team is well equipped, with an average of 11 years of portfolio management experience. Together, they manage a total of two strategies, with a Gold asset-weighted average Morningstar Medalist Rating, indicating the potential to deliver positive alpha relative to the category median in aggregate. This group has successfully retained management talent, with no departures in the past five years. 

 Note: This People Pillar rating is indirectly assigned by an analyst. Morningstar analysts evaluate the People Pillar for passive products at the brand level and may also differentiate by asset class. There is at least one other passive strategy at the firm that is covered by a Morningstar analyst, so the People Pillar rating of the fund is inherited from the rating that the Morningstar analyst assigned to investment vehicles under the same brand name.

People

The Vanguard Group retains a High Parent rating. 

Mutual ownership, low costs, and a direct-to-investor playbook have helped spur Vanguard's leadership within the United States. Client service missteps notwithstanding, Vanguard over the past decade has grown its market share of U.S. open-end and exchange-traded fund assets at about a 5% annualized clip. At that rate, Vanguard's portion of the U.S. industry will cross 50% around 2035.

True, some competitors can now match or even undercut Vanguard on fees for broad market exposure. But Vanguard's burgeoning advice business could help it keep or even extend that lead. Through Digital Advisor and Personal Advisor Services, Vanguard has built an increasingly compelling ecosystem of advice for investors with simple to complex needs.

Vanguard is also using its advice business to expand overseas, but that's a work in progress. Of Vanguard's USD 7.6 trillion in global assets under management in March 2023, non-U.S. investors owned less than 10%, a figure that has changed little in recent years. Strategic shifts in China and other markets account for the slow pace, including returning money to institutions that had been layering on fees. Vanguard hopes to recoup that money and more by focusing on individual investors and the advisors who serve them. Provided Vanguard sticks to its playbook, its advantages should translate into success abroad, too.

High

Parent

Vanguard S&P 500 Value ETF

VOOV tracks an index of large- and mid-cap value-style securities from the Committee-selected S&P 500.

The fund tracks an index of large- and mid-cap value-style securities from the committee-selected S&P 500.

The Vanguard S&P 500 Value ETF (VOOV) was launched on 09/09/2010, and is a passively managed exchange traded fund designed to offer broad exposure to the Large Cap Value segment of the US equity market.

Should Vanguard S&P 500 Value ETF (VOOV) Be on Your Investing Radar?

Tech stocks are vulnerable to a sharp decline, making growth portfolios risky. The Vanguard S&P 500 Value ETF is a strong fund for large-cap value exposure. VOOV has performed well, has diversified holdings, and offers a compelling case for investors seeking value exposure.

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Amid the Dow Jones rally, value stocks have made an impressive comeback, with investors looking for bargains.

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Vanguard S&P 500 Value ETF selects large-cap stocks based on book value-to-price, earnings-to-price, and sales-to-price ratios. It is better diversified across sectors than the S&P 500. It has lagged the benchmark since inception, but performs well among peers.

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This ETF trading model uses the Conference Board Leading Economic Index to determine “Risk-On” periods for equities. A universe is defined from the SPDR, Vanguard, and PowerShares ETF providers for the sectors healthcare, energy, communication, technology, and general multi-sector funds, holding large-mega cap stocks from the United States.

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Economic turmoil has pulled the S&P 500 into a bear market, but history says the next bull market is on its way. The S&P 500 produced a total return of 218% over the past decade, and it has produced a positive return over every 20-year period for the past century.

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An 8-sigma jobs gain in January shocked economists. Equities fell and rates rose immediately after the strong report.

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The Vanguard S&P500 Value ETF portfolio is composed of the "value" stocks within the S&P500. The fund is rather conservatively positioned: its top-3 holdings are Berkshire Hathaway, Exxon, and Johnson & Johnson.

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Investors have good reason to believe these index funds can weather a recession.

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Value stocks over the past two months have become even more compelling investments.

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It's now clear that the July/August rise in equity markets was a bear-market rally that quickly fizzled out. There are just too many headwinds to get overly bullish here: high inflation, rising interest rates, Putin's war on Ukraine that has broken global energy & food supply chains, etc.

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It is worth noting that value investing seems more lucrative amid the growing market uncertainties and rising rate environment.

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YTD, Vanguard's S&P500 Value ETF, VOOV, has outperformed the S&P500 by 6%+. That being the case, in a time of high inflation and rising interest rates, the VOOV ETF can be a stabilizing asset for investors holding a well-diversified portfolio.

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Many investors are quite nervous about the market's current high valuation level in the face of inflation and potential interest rate increases by the Federal Reserve.

News for Vanguard S&P 500 Value ETF ETF (VOOV)