Vanguard’s S&P 500 Value ETF (NYSEARCA: VOOV) has returned 20% over the past year, a respectable gain that nonetheless falls well short of what many other funds have delivered.
Value stocks have marginally improved their performance compared to prior years, but the broader gap between value and growth strategies remains largely unclosed.
VOOV is a passive ETF with a low expense ratio of 0.07%, filtering holdings based on valuation metrics such as book value-to-price ratios and price-to-earnings and price-to-sales ratios.
Stocks trading at cheaper valuations are included, while the fund uses the S&P 500 as its benchmark, a design choice intended to limit exposure to outright value traps.
Despite its value mandate, tech stocks constitute 21.4% of the portfolio, with financials representing another 14.8%, meaning the two sectors together account for roughly 35% of holdings.
The largest single holding is Apple (NASDAQ: AAPL) at 7.88%, a position that immediately complicates any argument for using VOOV as a hedge against big tech exposure.
VOOV also pays a dividend yield of just 1.66%, slightly above the broader S&P 500 benchmark, but not a compelling enough income argument to drive investor interest on its own.
The fund tracks the S&P 500 Value Index, which draws its constituents directly from the S&P 500 and holds approximately 440 stocks, representing the vast majority of the parent index.
For investors who already hold an S&P 500 fund, adding VOOV creates significant overlap, particularly through shared exposure to AAPL and a wide range of other large-cap names.
Investors seeking a genuine hedge against the tech sector may be better served by the Vanguard Consumer Staples ETF (NYSEARCA: VDC), which has returned 42% over the past five years and tends to hold its ground during tech downturns.
Those looking for value characteristics with stronger income and lower valuations could consider the Schwab US Dividend Equity ETF (NYSEARCA: SCHD), which carries a price-to-earnings ratio below 18x compared to VOOV’s nearly 21x, a dividend yield double that of VOOV, and fees that are 0.01% lower.
VOOV is not without merit for investors specifically seeking S&P 500 value tilt, but the market offers sharper and more purposeful tools for both income-focused and defensively oriented strategies.
