The pitch for iShares MSCI USA Value Factor ETF (CBOE:VLUE) and Vanguard Value ETF (NYSEARCA:VTV) sounds nearly identical: buy cheap U.S. large-caps and wait. Over the past year, VLUE returned 71.64% while VTV returned 25.63%. That 46-point gap reflects two very different definitions of “value,” and it tells you exactly what each fund is betting on.
What Each Fund Is Actually Betting On
VTV tracks the CRSP US Large Cap Value Index, a market-cap-weighted basket of roughly 340-plus large-caps filtered on book value, forward and historical P/E, dividend yield, and sales-to-price. Because it is cap-weighted, it favors mega-cap value: Berkshire, JPMorgan, ExxonMobil, UnitedHealth. It bets that the biggest, most established value names will grind out returns.
VLUE plays a different game. It tracks the MSCI USA Enhanced Value Index, which ranks stocks within each sector by price-to-book, forward P/E, and enterprise-value-to-cash-flow, then holds only the cheapest. The sector-neutral rule is the twist: VLUE must own roughly the same sector weights as the parent MSCI USA index, so when tech screens cheap, VLUE loads up on tech. It bets on the value factor itself, not on which sectors are traditionally “value.”
Where That Bet Shows Up in the Portfolio
Current holdings make the divergence obvious. VLUE’s top two positions are Micron Technology at 11.60% and Intel at 9.26%, with Cisco, Applied Materials, and Western Digital pushing semiconductors and tech hardware to roughly 31.5% of the fund. That is what happens when a rules-based factor screen finds chipmakers trading at depressed multiples and the sector-neutral mandate forces the fund to buy them.
VTV spreads exposure across financials, healthcare, and industrials, with a thicker bench of dividend-paying mega-caps. That is why its annualized forward dividend of $4.3272 dwarfs VLUE’s $2.788616.
Where the Difference Shows Up in Returns
The 2026 semiconductor rebound is the clearest recent example. Year-to-date through July 13, VLUE is up 42.82% versus VTV’s 16.07%, because those Micron and Intel positions have ripped. Over longer periods, the pattern holds: VLUE is up 112.8% over five years against VTV’s 79.14%, and 291.3% over ten years versus 222.6%. When the value factor works, VLUE wins big. When cheap stocks keep getting cheaper, VLUE can lag badly while VTV’s mega-cap ballast absorbs the blow.
The Practical Comparison
| Metric | VLUE | VTV |
|---|---|---|
| Strategy | Sector-neutral value factor | Broad cap-weighted large value |
| Holdings | ~150 | ~340+ |
| Net assets | $12.0B | Materially larger |
| Expense ratio | Higher (roughly 0.15%) | 0.03% |
| Forward dividend | $2.79 | $4.33 |
| 5-year total return | 112.8% | 79.14% |
| Top position weight | Micron, 11.60% | Diversified mega-caps |
The Verdict
For investors using value exposure as a core holding, VTV screens as the broader, cheaper, higher-yielding option. It carries less concentration risk, steadier income, and returns driven by dozens of mature businesses rather than a handful of cyclical chipmakers. VLUE is a satellite position for investors who genuinely want the value factor, understand they are buying whatever screens cheap at the moment, and have the stomach for tracking error. If Micron and Intel roll over, or if the sector-neutral rebalance rotates VLUE into the next unloved corner of the market, recent outperformance can reverse just as quickly as it arrived.
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