VTV: A Smart Investment Choice for Long-Term Investors?

Without a doubt, one of the most compelling reasons for investing in exchange-traded funds (ETFs) is their ability to provide diversification. While selecting individual stocks can be rewarding, it also exposes you to significant risk if a major company in your portfolio experiences a downturn. ETFs offer a more secure approach to investing by spreading risk across various assets.

The quickest and most efficient way to achieve diversification is via ETFs. Certain funds focus on specific sectors, trends, or themes, such as online retail, cybersecurity, or robotics. Others adopt a broader perspective to encompass entire indices, enabling investors to benefit from a much larger array of stocks. A prime example of this is the Vanguard Value Index Fund ETF (VTV -0.32%), which specifically targets large-cap value stocks.

Although every investment portfolio has unique needs and goals, the VTV ETF stands out as a reliable option for investors seeking the stability that comes with value stocks while enjoying the convenience of a set-it-and-forget-it fund.

Let’s explore the offerings of this ETF further to determine whether it aligns with your investment strategy.

What Exactly Does the Vanguard Value Index Fund ETF Offer?

The Vanguard family of funds is recognized for managing some of the most efficient and cost-effective index funds available globally. The Vanguard Value Index Fund ETF meticulously tracks the CRSP US Large Cap Value Index, which is focused on large-capitalization value stocks. This fund operates on a passive management strategy, allowing investors to enjoy an incredibly low expense ratio of just 0.04%, translating to an annual cost of only $4 for every $10,000 invested. In comparison, Vanguard notes that the average expense ratio for similar funds is 0.87%, showcasing the fund’s exceptional value.

Additionally, the fund boasts a dividend yield of 2.2%, significantly surpassing the 1.2% yield offered by the S&P 500. This higher yield grants investors the opportunity to accumulate additional shares each quarter by reinvesting their dividend payouts back into the ETF, enhancing overall returns.

The VTV ETF has also demonstrated solid performance, having risen by 8.2% year-to-date, outperforming the Dow Jones Industrial Average by approximately 1%. When dividends are factored into the equation, the total return for VTV reaches an impressive 9.5% so far in 2025.

Image source: Getty Images.

Which Stocks Are Included in the VTV ETF Portfolio?

Investing in the Vanguard Value Index Fund ETF grants you exposure to a diverse array of companies. The fund currently holds interests in 323 stocks, well-distributed across various sectors. The financial services sector leads with a substantial 20.7% weighting, followed by technology at 14.1%, healthcare at 13.2%, and industrials at 11.7%. This strategic allocation helps mitigate risk across the portfolio.

Data source: Morningstar.

The well-diversified nature of this fund provides robust protection for investors, as no single holding exceeds a 4% weighting. Furthermore, the allocation strategy is astute, with only one of the top-10 holdings showing negative performance over the past year, highlighting the effectiveness of this investment approach.

Is Investing in the VTV ETF a Wise Decision?

The VTV ETF excels at tracking the CRSP US Large Cap Value Index, delivering impressive annual returns of 11.5% over the past decade and 14% over the last five years. These consistent returns indicate that this ETF is a viable option for long-term investors seeking to diversify their portfolios.

However, I advise that long-term investors consider allocating a portion of their portfolios to growth stocks as well. This balance can help you outperform the market over time and achieve more substantial returns. Remember, it’s crucial not to concentrate all your investments in a single asset class, even one as stable as the VTV ETF. Diversification within your portfolio can lead to more favorable outcomes in the long run.