This ETF tracks the S&P 500 Index, one of the most famous benchmarks in the world and one that tracks some of America's largest companies. As a result, investors should think of this as a play on mega and large cap stocks in the American market. These securities are usually known as 'Blue Chips' and are some of the most famous and profitable companies in the country, including well known names such as ExxonMobil, Apple, IBM, and GE. The fund is probably one of the safest in the equity world as the companies on this list are very unlikely to go under unless there is an apocalyptic event in the economy. However, these securities are unlikely to grow very much either as they are already pretty large and have probably seen their quickest growing days in years past, but most do pay out solid dividends which should help to ease the pain of this realization. Overall, VOO is a quality choice for investors seeking broad mega and large cap exposure and it is more diversified than most, containing just over 500 securities in total. As a result, this fund could serve as a building block for many portfolios making it an excellent choice for many buy and holders, especially for those looking to keep costs at a minimum.
The adjacent table gives investors an individual Realtime Rating for VOO on several different metrics, including liquidity, expenses, performance, volatility, dividend, concentration of holdings in addition to an overall rating. The "A+ Metric Rated ETF" field, available to ETFdb Pro members, shows the ETF in the Large Cap Blend Equities with the highest Metric Realtime Rating for each individual field. To view all of this data, sign up for a free 14-day trial for ETFdb Pro. To view information on how the ETFdb Realtime Ratings work, click here.View the Category Report
The following tables and charts contain in-depth metrics for this ETF and compare it to similar peer ETFs within its ETFdb.com Category.
This ETF is currently available for commission free trading on the following platforms: (Vanguard)
There are 14 other ETFs in the Large Cap Blend Equities ETFdb.com Category that are also eligible for commission free trading:
This section shows how this ETF has performed relative to its peer group ETFdb.com Category.
The following charts can be customized to display historical performance in a number of different formats, including line charts, bar charts, and candlesticks. Time periods can be adjusted to increase or decrease the period shown, ranging from five minutes to several months.
The following chart also includes the option to compare the performance of VOO relative to other ETFs and benchmarks or to include indicators such as Bollinger Bands, relative strength, and moving averages.
This section shows how the volatility of this ETF compares to the peer group ETFdb.com Category.
Published March 1, 2016
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The Vanguard 500 Index Fund (VOO ) is an open-ended investment mutual fund. The fund offers four classes of shares: investor shares, admiral shares, signal shares, and exchange-traded fund (ETF) shares. The fund seeks to track the investment performance of the Standard & Poor’s 500 Index by investing all of its assets in the stocks that make up that index.
VOO holds each stock in approximately the same proportion as its weighting in the index.This year, the fund has performed in line with the market, not surprisingly, as it seeks to track the performance of the S&P 500, which is down marginally 1.6% YTD.
In terms of historical performance, VOO has performed in line with the market. In percentage terms, over five years VOO is up 58.1%, which is in line with the S&P 500. Over the last one year, the fund is down 3.1%, which is also in line with the S&P 500.
VOO is heavily exposed to corporate earnings and therefore the global economy. Significant headwinds in the form of slowing demand in China, rising interest rates in the U.S., a strong dollar, and negative interest rate policies have been a drag on earnings for corporate America. In addition, the energy and commodities sectors, which together account for over 20% of the S&P 500 Index, have seen massive deleveraging in the face of historic lows for oil, copper and other metals. This has meant that only select companies in the technology, consumer staples/discretionary, telecom, and health care sectors have performed better than the overall market. Recently, though, with oil coming significantly off its lows, and the commodities sector no longer capitulating, there have been some positives in those sectors that have been laggards in the broader market. This has helped VOO and its tracking index come off of YTD lows of 11% to 1.6% as of this writing.
The macro picture for VOO is good. It appears that the energy and commodities sectors might have seen the worst already, with oil rising from historic lows in the mid-20s to the high 30s. Technology names such as Facebook (FB) and Google (GOOG) continue to do well and outperform peers in global earnings. Further, dollar-sensitive names such as Microsoft (MSFT) and Apple (AAPL) have beaten earnings, despite the strength in the greenback.
In addition, health care stocks have performed modestly in line with market expectations and will continue to do well in this election year. Financials, which constitute a large percentage of the S&P 500, will also do well as the Fed comes back to a new normal, though volatility in the bond markets and an extremely tough regulatory environment will challenge both existing and new income streams. Having said that, Wells Fargo (WFC), Goldman Sachs (GS) and JP Morgan (JPM), among others, will continue to do well. Utilities should also perform in line with market expectations.
That takes us to VOO’s financial ratios. VOO has around $42.8 billion in assets under management and a yield of 2.21%. The fund is close to its all-time high of $195.95, trading as of this writing at $185.76. Its all-time low, hit in August 2011 during the ratings crisis, is $102.94. At 0.05%, the fund’s expense ratio is significantly lower than other funds in its category. VOO has a turnover ratio of 3%.
A fundamental downside risk to an otherwise healthy outlook for VOO is that it tracks the overall market, making it extremely sensitive to headline risks, especially those from emerging markets and China. In addition, since VOO tracks the S&P 500, it also relies heavily on corporate earnings, which means that the strength of the greenback vis-à-vis other currencies could be a negative in the short term.
I believe there are other opportunities in specific companies to play the market, but for investors wanting broad exposure, or for those wanting to park money and have some market exposure while doing so, VOO is a good option. Given the recent rally, I believe it would be prudent to start accumulating VOO at lower levels of around $175 to $180. I believe VOO, which is trading right now at $185.75, is a Buy with a price target of $189.50.
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