Is the iShares S&P 500 Value ETF (IVE) a Worthwhile Addition to Your Investment Portfolio?

Is the iShares S&P 500 Value ETF (IVE) a Worthwhile Addition to Your Investment Portfolio?

Looking for broad exposure to the Large Cap Value segment of the US equity market? You should consider the iShares S&P 500 Value ETF IVE, a passively managed exchange traded fund launched on 05/22/2000.

The fund is sponsored by Blackrock. It has amassed assets over $33.54 billion, making it one of the largest ETFs attempting to match the Large Cap Value segment of the US equity market.

Why Large Cap Value

Companies that find themselves in the large cap category typically have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.

Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. They are however likely to underperform growth stocks in strong bull markets.

Costs

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 0.18%, making it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 1.63%.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund’s holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Financials sector–about 23% of the portfolio. Healthcare and Industrials round out the top three.

Looking at individual holdings, Berkshire Hathaway Inc Class B (BRK.B) accounts for about 3.87% of total assets, followed by Jpmorgan Chase & Co JPM and Exxon Mobil Corp XOM.

The top 10 holdings account for about 18.62% of total assets under management.

Performance and Risk

IVE seeks to match the performance of the S&P 500 Value Index before fees and expenses. The S&P 500 Value Index measures the performance of the large capitalization value sector of the U.S. equity market. It is a subset of the S&P 500 and consists of those stocks in the S&P 500 exhibiting the strongest value characteristics.

The ETF return is roughly 7.26% so far this year and it’s up approximately 24.34% in the last one year (as of 04/02/2024). In the past 52-week period, it has traded between $147.64 and $186.81.

The ETF has a beta of 0.95 and standard deviation of 15.02% for the trailing three-year period, making it a medium risk choice in the space. With about 450 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares S&P 500 Value ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, IVE is an outstanding option for investors seeking exposure to the Style Box – Large Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.

The iShares Russell 1000 Value ETF Is the iShares S&P 500 Value ETF (IVE) a Worthwhile Addition to Your Investment Portfolio?IWD and the Vanguard Value ETF VTV track a similar index. While iShares Russell 1000 Value ETF has $56.06 billion in assets, Vanguard Value ETF has $115.37 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.

Bottom-Line

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also 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.

Zacks Investment Research

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