Vanguard S&P Mid-Cap 400 Value Index Fund ETF Shares IVOV

Vanguard S&P Mid-Cap 400 Value ETF holds a quantitatively derived Gold Morningstar Medalist Rating. The rating reflects that it has scored particularly well on factors Morningstar research associates with future outperformance relative to category peers.

People: Above Average

Note: This share class' People Pillar rating and analysis are inherited from an analyst-covered share class under the same Strategy Provider Company (rolled up to Branding Name) and Morningstar Category Broad Group: Vanguard FTSE All-Wld ex-US SmCp ETF (SecID: FOUSA08NFZ).

Process: Above Average

Note: This share class' Process Pillar rating and analysis are inherited from an analyst-covered passive share class, which tracks the same index: iShares S&P Mid-Cap 400 Value ETF (SecID: FEUSA0000J).

Performance (in US Dollar)

Over the past 12 months, Vanguard S&P Mid-Cap 400 Value ETF share class returned 26.8%, underperforming both its category index, the Russell Mid Cap Value TR USD Index (41.7%), and its Morningstar category peers (31.2%). Across the 10-year period, the fund returned 10.6% per year, mirroring the index (10.6% per year) while outperforming its Morningstar Category average (9.8% per year).

Price

Vanguard S&P Mid-Cap 400 Value ETF's Prospectus Adjusted Expense Ratio is 0.1% per year. It places it in the cheapest quintile of the Morningstar US Fund Mid-Cap Value Category, where the median fee is 0.88% per year. This cost positioning translates into a Medalist Rating Price Score of 2.4, which reflects its relative price positioning within the category. The Price Score ranges from -2.50 (most expensive) to +2.50 (cheapest), with higher scores indicating better cost competitiveness.

The S&P MidCap 400 Value Index assigns a growth and value score to each stock in the S&P MidCap 400 Index. Those in the cheapest third are allocated to the value index, while the fastest-growing third are swept into the growth Index. The middle third is split between the two indexes based on their style traits until the market cap for each amounts to approximately half of the S&P MidCap 400 Index. This approach admits some pricier names into the value index, improving its breadth across the value-growth spectrum.

S&P requires all new entrants to be profitable at the time of admittance, though each holding may not currently be profitable. This constraint should reduce the number of struggling companies in the portfolio—companies that tend to perform especially poorly during periods of market stress—and help contain some of the extra volatility introduced by focusing on the smaller end of the mid-cap market segment.

The portfolio features smaller companies than most peers in the mid-cap value category. The fund's average market cap regularly measures less than half the category average. Omitting the largest 500 most profitable stocks in the US market creates a relatively tight eligibility window for companies to enter the portfolio. These constraints contribute to relatively high turnover. Historical turnover levels usually hover around 35%. That’s below the category average but above index-tracking peers, many of which can hold larger companies. High turnover raises transaction costs that can erode returns.

The fund's broad reach minimizes stock-specific risk. The portfolio usually holds around 300 stocks, and it concentrates only 10% of its assets across its top 10 holdings. Single holdings rarely account for more than 1.5% of the allocation, further distributing risk across the portfolio.

Sound diversification and a profitability bias should prevent any nasty surprises, but differences between this portfolio and its average peer could cause performance discrepancies from time to time. The fund tends to hold larger stakes in financials, real estate, and consumer cyclical stocks than its peers. These differences stem from omitting larger companies common to competitor portfolios, allocating instead to sectors that have more stocks within the index's market-cap bounds.

The portfolio remains a good representation of the mid-cap value category despite some differences. Most key valuation metrics are closely tied to the category average. Price/book, price/earnings, and price/sales ratios have all moved in lockstep with those of the fund's average peer since the fund's inception in 2000. Approximating the category average in this way should help this fund turn its low fee into a distinct performance advantage.

Note: This share class' Process Pillar rating and analysis are inherited from an analyst-covered passive share class which tracks the same index: iShares S&P Mid-Cap 400 Value ETF (SecID: FEUSA0000J).

Vanguard's equity index group earns an Above Average People Pillar rating for its well-supported and stable management team that's adept at leveraging Vanguard's comprehensive resources. Its portfolio managers benefit from the firm's global infrastructure and advanced portfolio management technology, which facilitates cost-efficient trading around the globe. The infrequent turnover of managers, coupled with Vanguard's practice of rotating them across various funds, enhances their expertise and understanding of different market segments.

The fund's managers directly handle trading, providing them with deeper insights into the portfolio's operations than a stand-alone trader might have. They are backed by a global team of dedicated personnel and employ sophisticated, scalable technology to minimize their workload and enhance tracking accuracy. Vanguard's independent risk management team plays a crucial role in ensuring its funds adhere to predetermined tracking tolerances. It collaborates closely with the managers to oversee trades and address potential issues proactively. Vanguard compensates managers based on tracking error and excess return metrics to foster a culture of accountability and ensure that the management team's interests are closely tied to investors'.

Note: This share class' People Pillar rating and analysis are inherited from an analyst-covered share class under the same Strategy Provider Company (rolled up to Branding Name) and Morningstar Category Broad Group: Vanguard FTSE All-Wld ex-US SmCp ETF (SecID: FOUSA08NFZ).

Vanguard maintains its High Parent Pillar rating as it continues to grow under new leadership.

CEO Salim Ramji has had a busy first year captaining Vanguard’s crew, and the ship remains pointed in the right direction. The firm made its largest round of fee cuts in early 2025, which came at an estimated cost of USD 350 million. It established a separate division dedicated to its advice and wealth management efforts, a sign that it wants to seriously compete within those lines of business. Asset growth has continued to be a huge success. Only BlackRock’s inflows rival the money Vanguard is taking in. Likewise, the number of clients it serves has more than doubled since 2015.

Despite that success, an ever-growing number of clients has presented a challenge: Vanguard can’t grow its services fast enough to keep up with demand. In some instances, it has had to curb certain services and capabilities or raise fees on others to cope, causing some loyal clients to criticize what they perceive as deteriorating services.

Vanguard has ambitions to bring its disruptive legacy to the bond market. It created roughly a dozen low-cost bond exchange-traded funds for US investors and several others abroad over the 12 months through June 2025. All have low fees in their respective categories, and the actively managed strategies align with Vanguard’s philosophy. They are relatively easy to understand and are conservatively managed.

Vanguard has another opportunity to prove that clients are still its priority. On the surface, its endeavor into the high-fee deal-making world of private assets alongside Wellington and Blackstone looks like a cultural mismatch. So far, the collaboration hasn’t produced anything that’s concerning.

Note: This share class' Parent Pillar rating is analyst-driven, as its Branding Name, Vanguard (Branding Name ID: BN00000AAL), is covered by Morningstar Manager Research.

Performance is evaluated in US Dollar, measured to the end of April 2026.

Short-Term Performance

Over the past 12 months, Vanguard S&P Mid-Cap 400 Value ETF share class returned 26.8%, underperforming its category index, the Russell Mid Cap Value TR USD Index (41.7%), and its Morningstar category peers (31.2%). Over the three-year period, it returned 14% per year, lagging the index (16.8% per year) while outperforming its Morningstar category peers (13.8% per year).

Long-Term Performance

The fund's five-year annualized return of 8% fell short of the benchmark (9% per year) but mirrored the Morningstar Category average (8% per year). Across the 10-year period, the fund returned 10.6% per year, mirroring the index (10.6% per year) but ahead of its Morningstar Category average (9.8% per year).

Vanguard S&P Mid-Cap 400 Value ETF's Prospectus Adjusted Expense Ratio is 0.1% per year. It places it in the cheapest quintile of the Morningstar US Fund Mid-Cap Value Category, where the median fee is 0.88% per year. This cost positioning translates into a Medalist Rating Price Score of 2.4, which reflects its relative price positioning within the category. The Price Score ranges from -2.50 (most expensive) to +2.50 (cheapest), with higher scores indicating better cost competitiveness.