Investing $500: Exploring the Vanguard Value ETF Opportunity
If you have $500 to invest, you’re in a promising situation as the overall stock market has declined, making many solid stocks available at attractive prices.
Consider the Vanguard Value ETF (NYSEMKT: VTV). This article introduces you to the ETF and outlines key considerations.
Looking to invest $1,000 now? Our analyst team has identified the 10 best stocks to buy currently. Continue »
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An Overview of the Vanguard Value ETF
The Vanguard Value ETF is an exchange-traded fund (ETF) that operates similarly to a stock. Vanguard is recognized for its low fees, and the ETF’s expense ratio of just 0.04% means you will only pay $4 annually for every $10,000 invested.
This ETF tracks the CRSP US Large Cap Value Index, aligning with large and mid-size companies that appear undervalued in the market.
Value investing, which involves identifying undervalued stocks that offer a margin of safety, is a well-regarded strategy. Typically, this approach favors stable companies with slower growth rates over potentially overvalued high-growth companies.
Here are the ETF’s recent top holdings:
|
Weight in ETF |
|
|---|---|
|
Berkshire Hathaway |
3.45% |
|
JPMorgan Chase |
3.30% |
|
ExxonMobil |
2.17% |
|
Broadcom |
2.06% |
|
UnitedHealth Group |
1.93% |
|
Walmart |
1.93% |
|
Procter & Gamble |
1.81% |
|
Johnson & Johnson |
1.76% |
|
Home Depot |
1.74% |
|
AbbVie |
1.63% |
Source: Vanguard.com, as of Feb. 28.
The fund includes 340 stocks, boasting a median market capitalization of $142 billion. Over the past five years, it achieved an impressive average annual earnings growth of 10% with a recent price-to-earnings (P/E) ratio of 20.2.
For comparison, the Vanguard Growth ETF (NYSEMKT: VUG) has an average annual earnings growth of 27.2%, with a P/E ratio of 27.2.
Additionally, the Vanguard Value ETF has a favorable turnover rate of 8.8% as of the end of 2024, indicating that only a small portion of the fund’s total value is actively traded.
Spatially, 22.4% of the ETF’s assets are allocated to financial companies, while 15.6% are in healthcare stocks, 15.1% in industrials, and 8.9% each in consumer discretionary and consumer staples sectors.
Reasons to Consider the Vanguard Value ETF
Why should you invest in the Vanguard Value ETF? Primarily due to its solid structure and low fees. Additionally, in light of potential economic uncertainties, value-focused investing could be advantageous. However, forecasts of a recession are not certain.
Growth stocks often carry a higher risk of being overvalued, particularly if their anticipated growth draws significant investor interest. Notably, the “Magnificent Seven” stocks, currently not included in the Vanguard Value ETF, exemplify this risk—but their inclusion can change based on valuations.
By contrast, value stocks often present undervalued or fairly valued prospects, showing greater resilience during market downturns.
Is the Vanguard Value ETF Suitable for You?
This ETF may suit you if you are risk-averse, plan to invest for a few years, and desire instant diversification across numerous well-valued stocks.
Importantly, the Vanguard Value ETF offers a dividend, with a recent yield of 2.2%, which is almost one percentage point above the current 1.3% yield from the S&P 500. If you invest in the ETF, anticipate receiving $22 from each $1,000 invested, with growth expected over time.
Regardless of whether you choose this ETF or explore other options, prioritize saving and investing for your retirement.
Should You Invest $1,000 in the Vanguard Value ETF Now?
Before purchasing shares in the Vanguard Value ETF, consider the following:
The Motley Fool Stock Advisor analyst team has recently identified the 10 best stocks for investment right now, which do not include Vanguard Value ETF. The highlighted stocks could yield significant returns in the coming years.
Take, for instance, Netflix, which made the list on December 17, 2004… a $1,000 investment at that time would be worth $524,747!* Similarly, Nvidia was listed on April 15, 2005… and a $1,000 investment then would have grown to $622,041!*
Note that Stock Advisor has an average total return of 792%, significantly surpassing the 153 percent return achieved by the S&P 500.
*Stock Advisor returns as of April 14, 2025
JPMorgan Chase is an advertising partner of Motley Fool Money. Selena Maranjian holds positions in AbbVie, Berkshire Hathaway, Broadcom, Procter & Gamble, and Vanguard Index Funds-Vanguard Growth ETF. The Motley Fool maintains positions in and recommends AbbVie, Berkshire Hathaway, Home Depot, JPMorgan Chase, Vanguard Index Funds-Vanguard Growth ETF, Vanguard Index Funds-Vanguard Value ETF, and Walmart. Additional recommendations include Broadcom, Johnson & Johnson, and UnitedHealth Group. The Motley Fool follows a disclosure policy.
The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
