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Should Engine No. 1 Transform 500 ETF (VOTE) Be on Your Investing Radar?

If you're interested in broad exposure to the Large Cap Blend segment of the US equity market, look no further than the Engine No. 1 Transform 500 ETF (VOTE), a passively managed exchange traded fund launched on 06/22/2021.

The fund is sponsored by Engine No. 1. It has amassed assets over $299.45 million, making it one of the average sized ETFs attempting to match the Large Cap Blend segment of the US equity market.

Why Large Cap Blend

Companies that fall in the large cap category tend to have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.

Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.

Costs

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

Annual operating expenses for this ETF are 0.05%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 0%.

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 Information Technology sector--about 28.20% of the portfolio. Healthcare and Financials round out the top three.

Looking at individual holdings, Apple Inc (AAPL) accounts for about 7.19% of total assets, followed by Microsoft Corp (MSFT) and Amazon.com Inc (AMZN).

The top 10 holdings account for about 27.74% of total assets under management.

Performance and Risk

VOTE seeks to match the performance of the MORNINGSTAR US LARGE CAP SELECT INDEX before fees and expenses. The Morningstar US Large Cap Select Index is market cap-weighted and tracks the 500 largest companies in the US.

The ETF has lost about -25.20% so far this year and is down about -17.14% in the last one year (as of 10/03/2022). In the past 52-week period, it has traded between $41.59 and $56.33.

The ETF has a beta of 1 and standard deviation of 20.30% for the trailing three-year period. With about 509 holdings, it effectively diversifies company-specific risk.

Alternatives

Engine No. 1 Transform 500 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, VOTE is a good option for those seeking exposure to the Style Box - Large Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.

The iShares Core S&P 500 ETF (IVV) and the SPDR S&P 500 ETF (SPY) track a similar index. While iShares Core S&P 500 ETF has $267.27 billion in assets, SPDR S&P 500 ETF has $322.73 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.

Bottom-Line

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are 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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Engine No. 1 Transform 500 ETF (VOTE): ETF Research Reports
 
Amazon.com, Inc. (AMZN): Free Stock Analysis Report
 
Apple Inc. (AAPL): Free Stock Analysis Report
 
Microsoft Corporation (MSFT): Free Stock Analysis Report
 
SPDR S&P 500 ETF (SPY): ETF Research Reports
 
iShares Core S&P 500 ETF (IVV): ETF Research Reports
 
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