Launched on 01/22/2014, the Vident U.S. Equity Strategy ETF (VUSE) is a smart beta exchange traded fund offering broad exposure to the Style Box - All Cap Value category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by Vident Financial, and has been able to amass over $596.92 million, which makes it one of the larger ETFs in the Style Box - All Cap Value. Before fees and expenses, this particular fund seeks to match the performance of the Vident Core U.S. Equity Fund Index.
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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.50%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.81%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
For VUSE, it has heaviest allocation in the Information Technology sector --about 26.60% of the portfolio --while Financials and Consumer Discretionary round out the top three.
When you look at individual holdings, Amazon.com Inc (AMZN) accounts for about 2.98% of the fund's total assets, followed by Broadcom Inc (AVGO) and Walmart Inc (WMT).
VUSE's top 10 holdings account for about 22.26% of its total assets under management.
Performance and Risk
The ETF return is roughly 4.18% and it's up approximately 19.20% so far this year and in the past one year (as of 01/22/2025), respectively. VUSE has traded between $51.31 and $62.14 during this last 52-week period.
The ETF has a beta of 1.10 and standard deviation of 17.27% for the trailing three-year period, making it 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 $12.87 billion in assets, iShares Core S&P U.S. Value ETF has $20.27 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
Broadcom Inc. (AVGO) : 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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