2023-04-25 22:38:08 ET
Summary
- With a PE ratio of 12.2x, the Vanguard Small-Cap Value Index Fund ETF trades at a near 40% discount to the S&P 500, which is the largest discount seen over the past decade.
- I expect to see the VBR outperform the S&P 500 by around 1-4pp per year over the long term, depending on the extent of valuation mean reversion.
- While heavy financials exposure leaves the VBR susceptible to renewed credit stress, the intense underperformance already seen, combined with the steepening yield curve, has improved the outlook for the sector.
For further details see:
VBR: Small Cap Value Too Cheap To Ignore