If you’re looking to add a low-cost value fund to your portfolio, you’d be challenged to find anything that beats Vanguard large-cap value stock ETFs.
As we noted in our feature of Vanguard large-cap value mutual funds, investors that buy value funds are typically looking for income through dividends or they’re looking for long-term capital appreciation with a value slant, or they may be looking for both.
Fortunately Vanguard’s large-cap value ETFs have even more of the same qualities as their mutual funds, although at even lower expenses and higher yields, which are the primary qualities value investors like to see in their funds.
As a bonus, ETFs can be traded during the day and can be bought for as little as the cost of a single share, whereas mutual fund trades settle at the end of the day and minimum purchases are $3,000 or higher for most of Vanguard mutual funds.
Vanguard Large-Cap Value Stock ETFs
Vanguard High Dividend Yield (NYSEARCA:VYM): Vanguard’s VYM provides low-cost exposure to stocks with high dividend yields. This index fund tracks the FTSE High Dividend Yield Index, which covers about 400 stocks that pay high dividends. VYM is broadly diversified across several industrial sectors, which makes this ETF a smart value play for investors wanting to avoid focused exposure to just one or two sectors. The current yield for VYM is 3.01% and the expense ratio is 0.08%, or $8 for every $10,000 invested.
Vanguard Mega Cap Value (NYESARCA:MGV): This ETF focuses on large-cap value stocks with the highest market caps, which are commonly referred to as mega-caps. MGV passively tracks the CRSP US Mega Cap Value Index, which consists of approximately 150 of the largest value names in the U.S. stock market. Mega-cap stocks tend to have lower volatility than smaller capitalization stocks but long-term returns tend to average slightly lower. This makes MGV a smart play for investors looking for decent yields, solid returns but less volatility the market averages. The current yield for MGV is 2.48% and the expense ratio is 0.07%, or $7 for every $10,000 invested.
Vanguard Value (NYSEARCA:VTV): Investors looking for a pure value play to cover large-cap value stocks will like what they see in Vanguard’s VTV. This ETF doesn’t try to carve out a particular income or capitalization niche but rather covers the whole large-cap value space, which makes the fund attractive to investors looking for a diversified value fund. VTV passively tracks the CRSP US Large Cap Value Index, which covers over 300 U.S. large-cap value stocks. The current yield for VTV is 2.48% and the expense ratio is 0.08%, or $8 for every $10,000 invested.
As of this writing, Kent Thune did not personally hold a position in any of the aforementioned securities.His No. 1 holding is his privately held investment advisory firm. Under no circumstances does this information represent a recommendation to buy or sell securities.