Large Cap stocks

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pachha
Posts: 4
Joined: Sun Jul 08, 2018 12:24 am

Large Cap stocks

Post by pachha »

VV ETF(Vanguard large cap) is a blend and contains VTV ETF(Vanguard value) plus VUG ETF(Vanguard growth) stocks ? Am I correct? What percentage of large-cap stocks are value stocks and growth stocks?
alex_686
Posts: 10779
Joined: Mon Feb 09, 2015 2:39 pm

Re: Large Cap stocks

Post by alex_686 »

You are thinking about this the wrong way.

You start out with a universe of stocks. In this case the S&P 500.

You then dived those stocks into value stocks and growth stocks (well, technically not-value-stocks). Those who are the most value like are put in the value bucket. i.e., 50%. That is, the value qualifier is a relative measure, not a absolute measure.

Other indexes do it differently. 1/3 value, 1/3 core, 1/3, growth. Or 1/2 value and 1/2 growth with some stocks assigned to both.

There is no right way to do this. Free float market cap is fairly objective and the mythology is stable. Value is not. There are questions on what the value factor actually means, if it still exists, and the best way to measure it.

As a result, the measure has to be relative. i.e., how value like is a stock relative to the rest of the market.

As a aside, I feel that statistical power of the value factor is wanning. One of the metrics it is tied to is book value. As more and more assets are shifted to intangible property the less relevant book value is. There are exceptions. Book value still matters with banks and other financials.
Last edited by alex_686 on Thu Sep 22, 2022 1:48 pm, edited 1 time in total.
Former brokerage operations & mutual fund accountant. I hate risk, which is why I study and embrace it.
livesoft
Posts: 81205
Joined: Thu Mar 01, 2007 8:00 pm

Re: Large Cap stocks

Post by livesoft »

One may wish to explore all these funds/ETFs and their contents by using Vanguard.com and Morningstar.com. Morningstar.com sort of made the 9-box style grid popular. I own VV / VLCAX, but I haven't looked in a long time to what its holdings are. I am sure it owns many stocks found in VTV and VUG, but it likely also owns stocks not found in either of those. It is also likely that it does not own some stocks that are found in VTV and VUG.

If you explore more, then let us know.
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