Investment Education

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

The fund is sponsored by Tcw. It has amassed assets over $715.33 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. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.

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

Costs

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

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 1.17%.

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 32% of the portfolio. Financials and Consumer Discretionary round out the top three.

Looking at individual holdings, Apple Inc (AAPL) accounts for about 6.63% of total assets, followed by Microsoft Corp (MSFT) and Nvidia Corp (NVDA).

The top 10 holdings account for about 33.57% 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 gained about 27.09% so far this year and was up about 37.93% in the last one year (as of 11/13/2024). In the past 52-week period, it has traded between $52.41 and $70.20.

The ETF has a beta of 1 and standard deviation of 17.70% for the trailing three-year period. With about 508 holdings, it effectively diversifies company-specific risk.

Alternatives

TCW Transform 500 ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, VOTE is an outstanding option for investors seeking exposure to the Style Box - Large Cap Blend segment of the market. There are other additional ETFs in the space that investors could consider as well.