Debuting in April of 2013, the fund (Expense Ratio 0.15%, $1.9 billion in AUM, 3-star Morningstar ranking) will celebrate its fourth year of live trading performance in several months. VLUE competes in a space populated by behemoths such as IWD (iShares Russell 1000 Value, Expense Ratio 0.21%, $34 billion in AUM), VTV (Vanguard Value, Expense Ratio 0.09%, $27 billion in AUM), and VIG (Vanguard Dividend Appreciation, Expense Ratio 0.10%, $22 billion in AUM).
According to fund literature, this product from iShares, unlike other iShares products such as IWD for example that employs a straight, passive index approach, VLUE instead incorporates fundamental factors within the investment methodology. Specifically, fund literature states when making the case for “Why VLUE?” the following bullet-points: “1) Exposure to large- and mid-cap U.S. stocks with lower valuations based on fundamentals. 2) Index-based access to a specific factor which has historically driven a significant part of companies’ risk and return. 3) Use to help manage exposure and risk within a stock allocation.”
Since its inception, VLUE has actually impressively outperformed the aforementioned Russell 1000 Value index and the ETF represented by IWD, which also happens to be the largest “U.S. Value Equity” fund offered in the current U.S. product landscape. Granted, the live trading performance history is limited, but the sheer asset levels that are currently present and invested in funds like IWD, VTV and VIG may provide some foresight into potential future growth of a fund like VLUE.
When we break down the current holdings of VLUE, we can gain some insight into the specific sector allocations that are driving returns in the fund. Technology is the heaviest weighted sector at 21%, followed by Health Care (15%), Financial Services (14%), Consumer Discretionary (12%), and Industrials (10%).
From an individual security standpoint, top holdings appear as follows: 1) AAPL (7.88%), 2) CVX (3.65%), 3) INTC (3.54%), 4) WMT (3.47%), and PFE (3.47%). Our biggest takeaway here is that AAPL is not only considered a “Value” name by VLUE, but the highest weighted member and by a large margin (more than twice the weighting of the next largest member CVX). AAPL weighs in only at 0.49% of IWD, in comparison.
The iShares Trust (NYSE:VLUE) was trading at $70.62 per share on Wednesday afternoon, down $0.10 (-0.14%). Year-to-date, VLUE has gained 0.61%, versus a 1.23% rise in the benchmark S&P 500 index during the same period.
Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.
Paul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.
He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.