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The global stock market has been caught in a nasty web of woes that led to a broad sell-off. The biggest culprit is the fear over the potential collapse of property developer China Evergrande Group. The China-based real estate juggernaut, which has been sitting on a huge debt of more than $300 billion, could default on its interest payment of $150 million due later this week, potentially triggering a global financial meltdown like the post Lehmann Brothers collapse.
Ongoing debates over the debt limit in Washington and the Fed’s taper talks added to the market uncertainty. The White House warned that failure by the U.S. Congress to extend the debt limit could push the economy into a recession and lead the country to default on its payment obligations. The U.S. House is set to vote this week on the debt ceiling.
Additionally, concerns over accelerating coronavirus infections, renewed inflation fears, signs of a slowdown in China, and potential for high corporate tax rates have been making investors jittery in recent weeks (read: September's Weak History Turning True: 5 ETF Buying Zones).
However, the wider spread of COVID-19 vaccines, a greater vaccination push, improving economic growth, an expanded stimulus, and the resumption of corporate earnings growth have been fueling rally in the stock market this year and will likely continue doing so. The latest batch of data also painted an upbeat picture of U.S. consumers. Retail sales unexpectedly jumped in August as a pickup in purchases across most categories more than offset the weakness at auto dealers, showing resilient consumer demand for merchandise.
Amid such a scenario, value investing seems appealing to investors.
Why Value?
Value stocks have strong fundamentals — earnings, dividends, book value, and cash flow — that trade below their intrinsic value and are undervalued by the market. These seek to capitalize on the inefficiencies in the market and have the potential to deliver higher returns with lower volatility compared with their growth and blend counterparts. Additionally, value stocks are less susceptible to trending markets and their dividend payouts offer safety in times of market turbulence (read: Value ETFs Looking Attractive Now: Let's Explore).
Notably, these stocks outperform the growth ones across all asset classes when considered on a long-term investment horizon. Honing in on lower expense ratio ETFs in this space will be an ideal choice. With an ongoing price war, expense ratio is the biggest crowd puller in the ETF world. Funds with low expense ratios significantly outperform their expensive counterparts when other factors remain constant.
Given this, we have presented a bunch of ETFs with a solid Zacks ETF Rank #2 (Buy) and a lower expense ratio of under 15% that will likely outperform in the coming weeks, especially in a shaky market.
With AUM of $12.4 billion, this ETF tracks the S&P 500 Value Index. It holds 431 stocks in its basket with each making up for no more than 3% share. The product sees average daily volume of 2.1 million shares.
Schwab U.S. Large-Cap Value ETF (SCHV - Free Report) – Expense ratio: 0.04%
This is also a large-cap centric fund that targets the value segment by tracking the Dow Jones U.S. Large-Cap Value Total Stock Market Index. It holds well diversified 541 stocks in its basket and has amassed assets worth $9.7 billion. The fund trades in volume of around 324,000 shares a day on average.
This ETF follows the CRSP US Large Cap Value Index, holding 352 stocks in its basket with each accounting for less than 3% share. VTV has AUM of $83.7 billion and an average daily volume of 2.1 million shares (read: Volatility ETFs Spike on Evergrande Collapse Fears).
Vanguard Mega Cap Value ETF (MGV - Free Report) – Expense ratio: 0.07%
This fund offers diversified exposure to 146 largest value stocks in the U.S. market by tracking the CRSP US Mega Cap Value Index. It has been able to manage assets worth $4.5 billion and trades in average daily volume of 106,000 shares.
Vanguard Russell 1000 Value ETF (VONV - Free Report) – Expense ratio: 0.08%
With AUM of $6.5 billion, this ETF follows the Russell 1000 Value Index and holds 844 stocks in its basket. The product trades in average daily volume of 402,000 shares.
This fund seeks to track the S&P 500 Value Index, holding 433 stocks in its basket. It has AUM of $2.3 billion sees average daily volume of 68,000 shares.
This fund follows the S&P 500 Enhanced Value Index, holding 99 stocks in its basket with each making up for less than 5.4% of assets. It has accumulated $134.7 million in AUM while trades in a light average daily volume of 176,000 shares (read: 401(k) Balances at All-Time Highs: 6 ETFs to Buy).
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A Bunch of Dirt-Cheap Value ETFs to Buy Now
The global stock market has been caught in a nasty web of woes that led to a broad sell-off. The biggest culprit is the fear over the potential collapse of property developer China Evergrande Group. The China-based real estate juggernaut, which has been sitting on a huge debt of more than $300 billion, could default on its interest payment of $150 million due later this week, potentially triggering a global financial meltdown like the post Lehmann Brothers collapse.
Ongoing debates over the debt limit in Washington and the Fed’s taper talks added to the market uncertainty. The White House warned that failure by the U.S. Congress to extend the debt limit could push the economy into a recession and lead the country to default on its payment obligations. The U.S. House is set to vote this week on the debt ceiling.
Additionally, concerns over accelerating coronavirus infections, renewed inflation fears, signs of a slowdown in China, and potential for high corporate tax rates have been making investors jittery in recent weeks (read: September's Weak History Turning True: 5 ETF Buying Zones).
However, the wider spread of COVID-19 vaccines, a greater vaccination push, improving economic growth, an expanded stimulus, and the resumption of corporate earnings growth have been fueling rally in the stock market this year and will likely continue doing so. The latest batch of data also painted an upbeat picture of U.S. consumers. Retail sales unexpectedly jumped in August as a pickup in purchases across most categories more than offset the weakness at auto dealers, showing resilient consumer demand for merchandise.
Amid such a scenario, value investing seems appealing to investors.
Why Value?
Value stocks have strong fundamentals — earnings, dividends, book value, and cash flow — that trade below their intrinsic value and are undervalued by the market. These seek to capitalize on the inefficiencies in the market and have the potential to deliver higher returns with lower volatility compared with their growth and blend counterparts. Additionally, value stocks are less susceptible to trending markets and their dividend payouts offer safety in times of market turbulence (read: Value ETFs Looking Attractive Now: Let's Explore).
Notably, these stocks outperform the growth ones across all asset classes when considered on a long-term investment horizon. Honing in on lower expense ratio ETFs in this space will be an ideal choice. With an ongoing price war, expense ratio is the biggest crowd puller in the ETF world. Funds with low expense ratios significantly outperform their expensive counterparts when other factors remain constant.
Given this, we have presented a bunch of ETFs with a solid Zacks ETF Rank #2 (Buy) and a lower expense ratio of under 15% that will likely outperform in the coming weeks, especially in a shaky market.
SPDR Portfolio S&P 500 Value ETF (SPYV - Free Report) – Expense Ratio: 0.04%
With AUM of $12.4 billion, this ETF tracks the S&P 500 Value Index. It holds 431 stocks in its basket with each making up for no more than 3% share. The product sees average daily volume of 2.1 million shares.
Schwab U.S. Large-Cap Value ETF (SCHV - Free Report) – Expense ratio: 0.04%
This is also a large-cap centric fund that targets the value segment by tracking the Dow Jones U.S. Large-Cap Value Total Stock Market Index. It holds well diversified 541 stocks in its basket and has amassed assets worth $9.7 billion. The fund trades in volume of around 324,000 shares a day on average.
Vanguard Value ETF (VTV - Free Report) – Expense ratio: 0.04%
This ETF follows the CRSP US Large Cap Value Index, holding 352 stocks in its basket with each accounting for less than 3% share. VTV has AUM of $83.7 billion and an average daily volume of 2.1 million shares (read: Volatility ETFs Spike on Evergrande Collapse Fears).
Vanguard Mega Cap Value ETF (MGV - Free Report) – Expense ratio: 0.07%
This fund offers diversified exposure to 146 largest value stocks in the U.S. market by tracking the CRSP US Mega Cap Value Index. It has been able to manage assets worth $4.5 billion and trades in average daily volume of 106,000 shares.
Vanguard Russell 1000 Value ETF (VONV - Free Report) – Expense ratio: 0.08%
With AUM of $6.5 billion, this ETF follows the Russell 1000 Value Index and holds 844 stocks in its basket. The product trades in average daily volume of 402,000 shares.
Vanguard S&P 500 Value ETF (VOOV - Free Report) – Expense ratio: 0.10%
This fund seeks to track the S&P 500 Value Index, holding 433 stocks in its basket. It has AUM of $2.3 billion sees average daily volume of 68,000 shares.
Invesco S&P 500 Enhanced Value ETF (SPVU - Free Report) – Expense Ratio: 0.13%
This fund follows the S&P 500 Enhanced Value Index, holding 99 stocks in its basket with each making up for less than 5.4% of assets. It has accumulated $134.7 million in AUM while trades in a light average daily volume of 176,000 shares (read: 401(k) Balances at All-Time Highs: 6 ETFs to Buy).