The Vident U.S. Equity Strategy ETF (VUSE) was launched on 01/22/2014, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - All Cap Value category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by Vident Financial, and has been able to amass over $600.74 million, which makes it one of the larger ETFs in the Style Box - All Cap Value. This particular fund seeks to match the performance of the Vident Core U.S. Equity Fund Index before fees and expenses.
The Vident U.S. Quality Index is a rules-based, systematic strategy index comprised of equity securities principally traded in the U.S. market of issuers domiciled in the United States.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for this ETF are 0.50%, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 0.92%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
VUSE's heaviest allocation is in the Information Technology sector, which is about 26.20% of the portfolio. Its Financials and Consumer Discretionary round out the top three.
Looking at individual holdings, Amazon.com Inc (AMZN) accounts for about 2.71% of total assets, followed by Oracle Corp (ORCL) and Walmart Inc (WMT).
Its top 10 holdings account for approximately 20.91% of VUSE's total assets under management.
Performance and Risk
The ETF has added roughly 17.54% and was up about 24.31% so far this year and in the past one year (as of 11/21/2024), respectively. VUSE has traded between $48.51 and $61.14 during this last 52-week period.
VUSE has a beta of 1.09 and standard deviation of 17.65% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 128 holdings, it effectively diversifies company-specific risk.
Alternatives
Vident U.S. Equity Strategy ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
Capital Group Dividend Value ETF (CGDV) tracks ---------------------------------------- and the iShares Core S&P U.S. Value ETF (IUSV) tracks S&P 900 Value Index. Capital Group Dividend Value ETF has $11.76 billion in assets, iShares Core S&P U.S. Value ETF has $19.78 billion. CGDV has an expense ratio of 0.33% and IUSV charges 0.04%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - All Cap Value.
Bottom Line
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.
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Get it free >>Vident U.S. Equity Strategy ETF (VUSE): ETF Research Reports
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
Walmart Inc. (WMT) : Free Stock Analysis Report
Oracle Corporation (ORCL) : Free Stock Analysis Report
iShares Core S&P U.S. Value ETF (IUSV): ETF Research Reports
Capital Group Dividend Value ETF (CGDV): ETF Research Reports
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