Designed to provide broad exposure to the Mid Cap Blend segment of the US equity market, the Vanguard Extended Market ETF (VXF – Free Report) is a passively managed exchange traded fund launched on 12/27/2001.
The fund is sponsored by Vanguard. It has amassed assets over $14 billion, making it one of the larger ETFs attempting to match the Mid Cap Blend segment of the US equity market.
Why Mid Cap Blend
With market capitalization between $2 billion and $10 billion, mid cap companies usually contain higher growth prospects than large cap companies, and are considered less risky than their small cap counterparts. These types of companies, then, have a good balance of stability and growth potential.
Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.06%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 1.14%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Financials sector–about 17.20% of the portfolio. Information Technology and Industrials round out the top three.
Looking at individual holdings, Blackstone Inc. (BX – Free Report) accounts for about 1.14% of total assets, followed by Palo Alto Networks Inc. (PANW – Free Report) and Marvell Technology Inc. (MRVL – Free Report) .
The top 10 holdings account for about 6.91% of total assets under management.
Performance and Risk
VXF seeks to match the performance of the S&P Completion Index before fees and expenses. The S&P Completion Index contains all of the U.S. common stocks regularly traded on the New York Stock Exchange and the Nasdaq over-the-counter market, except those stocks included in the S&P 500 Index.
The ETF has lost about -22.94% so far this year and is down about -25.20% in the last one year (as of 11/24/2022). In the past 52-week period, it has traded between $126.36 and $187.19.
The ETF has a beta of 1.18 and standard deviation of 30.59% for the trailing three-year period, making it a medium risk choice in the space. With about 3625 holdings, it effectively diversifies company-specific risk.
Vanguard Extended Market ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, VXF is a reasonable option for those seeking exposure to the Style Box – Mid Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.
The Vanguard MidCap ETF (VO – Free Report) and the iShares Core S&P MidCap ETF (IJH – Free Report) track a similar index. While Vanguard MidCap ETF has $51.72 billion in assets, iShares Core S&P MidCap ETF has $66.10 billion. VO has an expense ratio of 0.04% and IJH charges 0.05%.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.