Investors often find themselves weighing the pros and cons of various investment vehicles, particularly when it comes to exchange-traded funds (ETFs). Two popular choices on the market are the Vanguard Value ETF (VTV) and the State Street SPDR Portfolio S&P 1500 Composite Stock Market ETF (SPTM). Each has distinct characteristics tailored to different investment objectives.
The Vanguard Value ETF aims to track large-cap U.S. value stocks, focusing on well-established companies that typically exhibit lower price-to-book ratios. This ETF appeals primarily to those looking for investment stability and consistent dividend income. In contrast, the SPDR Portfolio S&P 1500 ETF mirrors the broader U.S. equity market, including a diverse array of stocks across large-, mid-, and small-cap categories. This broader focus allows SPTM to capture a wider range of market performance.
When examining key metrics, VTV presents an expense ratio of 0.04%, while SPTM offers a slightly lower rate of 0.03%. This makes SPTM marginally more affordable in terms of operational costs. Interestingly, the one-year return on VTV stands at 11.48%, compared to SPTM’s 12.91%. Dividend yield is another area where VTV excels, providing a 2.05% return to income-focused investors, while SPTM yields 1.13%.
In terms of asset under management, VTV commands a significant $218 billion, dwarfing SPTM’s $12 billion. Beta, a measure of volatility in relation to the S&P 500, shows VTV with a lower beta of 0.78, suggesting more stable price movements compared to SPTM’s beta of 1.02, indicating a higher volatility level.
Performance and risk metrics further delineate the two ETFs. Over the past five years, VTV exhibited a max drawdown of 17.03%, whereas SPTM experienced a larger drawdown of 24.15%. This suggests that VTV may provide a more stable investment experience, particularly for those averse to risk. In terms of growth, a hypothetical $1,000 investment in VTV would have grown to approximately $1,622, compared to SPTM’s $1,765—a testament to SPTM’s overall higher performance.
The portfolio compositions also spotlight their differences. SPTM encompasses a wide array of 1,510 stocks, predominantly in the technology sector, which accounts for 34% of its holdings, followed by financial services at 13% and consumer cyclical at 11%. Notable top holdings include tech giants like Nvidia, Apple, and Microsoft. VTV’s focus is narrower, consisting of 312 large-cap value stocks, with a heavier tilt toward financial services (25%), healthcare (16%), and industrials (13%). Leading names in VTV include JPMorgan Chase, Berkshire Hathaway, and Exxon Mobil.
Ultimately, the choice between VTV and SPTM depends on individual investment goals. For those prioritizing stability, consistent income, and a focus on established companies, the Vanguard Value ETF could be the optimal route. Conversely, for investors seeking diversification with a broad market exposure, particularly in a tech-heavy landscape, SPTM may prove to be a better fit. Understanding these nuances can significantly aid in making more informed investment decisions.
