This Vanguard Value ETF Is a Strong Choice

Key Morningstar Metrics for Vanguard Value ETF

• Morningstar Medalist Rating: Gold
• Process Pillar: Above Average
• People Pillar: Above Average
• Parent Pillar: High

Vanguard Value ETF VTV

offers investors a broadly diversified, market-cap-weighted portfolio of value stocks at a minuscule cost.

The exchange-traded fund tracks the CRSP US Large Cap Value Index, which focuses on stocks that represent the less expensive half of the broad market. The index selects from the CRSP US Large Cap Index, which holds the largest 85% of the US stock market by market capitalization. The index picks the stocks that exhibit the strongest value characteristics, like low valuations, low projected earnings growth, and high dividend yields.

Focusing on companies with strong value characteristics can leave this fund vulnerable to value traps—stocks that have low valuations and projected growth because they are poor investments, not hidden gems. The ETF’s market-cap weighting mitigates some of that risk by favoring larger, more stable stocks. In addition, its market-cap weighting harnesses the market’s collective view of each stock’s relative value and typically requires lower turnover, reducing transaction costs.

The strategy closely mimics the characteristics of its peers in the large-value Morningstar Category. Sector allocations rarely deviate more than 5 percentage points from the category average. Value factors such as price/earnings, price/book, and dividend yield mirror those of peers. With a portfolio that approximates the shape of its large-value peers, this fund turns its low cost into a performance advantage.

The fund benefits from diversification. It held around 330 stocks and allocated 21% of its assets to its top 10 holdings, compared with peers’ 30%, as of May 2025. Financial services occupied 25% of the portfolio’s assets, the largest of any sector, which was in line with the category average of 21%.

Vanguard Value ETF: Performance Highlights

The ETF outperformed its average large-value peer by 1.51 percentage points over the 10 years through June 2025. This was due, in large part, to its cost advantage. In addition, its volatility was lower, and risk-adjusted returns were higher than those of peers. That held true in the short term as well: The fund touted higher risk-adjusted returns over the trailing three- and five-year periods. The fund’s low fee, coupled with lower turnover, provides an advantage over peers.

The fund tends to perform better than peers in market upswings and doesn’t lose as much in market downturns. Its small cash position helps capture most of the upswings in boom markets but can be detrimental in down markets. However, that potential disadvantage hasn’t been realized. This fund has outperformed peers in both boom and bust markets most years, partly because of its larger positions in high-performing stocks such as Broadcom AVGO and Berkshire Hathaway BRK.B.