Vanguard Extended Market ETF: A Low-Cost Mid Cap Blend Option for Diversified Exposure

The Vanguard Extended Market ETF (VXF) is a passively managed ETF that provides exposure to the Mid Cap Blend segment of the US equity market. With a 12-month trailing dividend yield of 1.14% and an annual operating expense of 0.05%, it is one of the cheaper products in the space. The ETF has a heaviest allocation to the Information Technology sector and holds around 3383 stocks in its portfolio, effectively diversifying company-specific risk.

The Vanguard Extended Market ETF (VXF) is a passively managed exchange-traded fund (ETF) designed to provide broad exposure to the Mid Cap Blend segment of the U.S. equity market. Launched on December 27, 2001, VXF has amassed assets over $22.36 billion, making it one of the larger ETFs in this segment [1].

Key Features of VXF

Dividend Yield and Expenses
VXF offers a 12-month trailing dividend yield of 1.14%, making it an attractive option for income-oriented investors. The fund's annual operating expenses are a low 0.05%, positioning it as one of the cheaper products in the space [1].

Sector Exposure and Top Holdings
The ETF has a significant allocation to the Information Technology sector, accounting for about 19% of its portfolio. Industrials and Financials are the next top sectors. Individual holdings include Slcmt1142, Microstrategy Inc (MSTR), and Applovin Corp (APP), with Slcmt1142 making up approximately 2.01% of total assets [1].

Performance and Risk
VXF seeks to match the performance of the S&P Completion Index before fees and expenses. As of the latest data, the ETF has returned about 2.53% so far this year and was up approximately 12.22% over the last year. The fund's beta of 1.17 and standard deviation of 21.74% for the trailing three-year period indicate a medium risk profile [1].

Diversification
With approximately 3383 holdings, VXF effectively diversifies company-specific risk, providing investors with a broad and diversified portfolio. This diversification helps mitigate the impact of any single stock's performance on the overall fund [1].

Alternatives and Considerations

Investors seeking exposure to the Mid Cap Blend segment may also consider other ETFs such as the Vanguard Mid-Cap ETF (VO) and the iShares Core S&P Mid-Cap ETF (IJH). VO and IJH track a similar index but have different asset sizes and expense ratios. VO has $84.02 billion in assets and an expense ratio of 0.04%, while IJH has $95.08 billion in assets and an expense ratio of 0.05% [1].

Conclusion

The Vanguard Extended Market ETF (VXF) is a cost-effective and diversified option for investors looking to gain exposure to the Mid Cap Blend segment of the U.S. equity market. With its low expense ratio and moderate risk profile, VXF offers a solid choice for long-term investors seeking a balance of stability and growth potential.

References

[1] https://www.nerdwallet.com/article/investing/high-dividend-etfs
[2] https://finance.yahoo.com/news/vanguard-extended-market-etf-vxf-102002420.html