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If you're interested in broad exposure to the Small Cap Growth segment of the US equity market, look no further than the Vanguard Russell 2000 Growth ETF (VTWG), a passively managed exchange traded fund launched on 09/22/2010.
The fund is sponsored by Vanguard. It has amassed assets over $716.63 million, making it one of the average sized ETFs attempting to match the Small Cap Growth segment of the US equity market.
Why Small Cap Growth
Small cap companies have market capitalization below $2 billion. They usually have higher potential than large and mid cap companies with stocks but higher risk.
Qualities of growth stocks include faster growth rates compared to the broader market, as well as higher valuations and higher than average sales and earnings growth rates. Something to keep in mind is the higher level of volatility that is affiliated with growth stocks. Compared to value stocks, growth stocks are a safer bet in a strong bull market, but don't perform as strongly in almost all other financial environments.
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.15%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 0.41%.
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.
This ETF has heaviest allocation to the Healthcare sector--about 31.90% of the portfolio. Information Technology and Consumer Discretionary round out the top three.
Looking at individual holdings, Plug Power Inc. (PLUG) accounts for about 0.92% of total assets, followed by Caesars Entertainment Inc. (CZR) and Rh (RH).
Performance and Risk
VTWG seeks to match the performance of the Russell 2000 Growth Index before fees and expenses. The Russell 2000 Growth Index measures the performance of those Russell 2000 companies with higher price/book ratios and higher predicted and historical growth rates.
The ETF has added about 5.83% so far this year and is up about 39.07% in the last one year (as of 07/23/2021). In the past 52-week period, it has traded between $153.52 and $245.35.
The ETF has a beta of 1.23 and standard deviation of 28.62% for the trailing three-year period, making it a high risk choice in the space. With about 1204 holdings, it effectively diversifies company-specific risk.
Vanguard Russell 2000 Growth 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, VTWG is a sufficient option for those seeking exposure to the Style Box - Small Cap Growth area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 2000 Growth ETF (IWO) and the Vanguard SmallCap Growth ETF (VBK) track a similar index. While iShares Russell 2000 Growth ETF has $11.80 billion in assets, Vanguard SmallCap Growth ETF has $15.78 billion. IWO has an expense ratio of 0.24% and VBK charges 0.07%.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds 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.
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Vanguard Russell 2000 Growth ETF (VTWG): ETF Research Reports
Plug Power, Inc. (PLUG) : Free Stock Analysis Report
RH (RH) : Free Stock Analysis Report
Caesars Entertainment, Inc. (CZR) : Free Stock Analysis Report
iShares Russell 2000 Growth ETF (IWO): ETF Research Reports
Vanguard SmallCap Growth ETF (VBK): ETF Research Reports
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