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Wall Street went into a tailspin on Dec 4, snapping the decent start to the month and indicating no relief to the bloodbath since late-September. Since then, more than $3 trillion has been erased from the market.
Three key U.S. indexes SPDR S&P 500 ETF (SPY - Free Report) ), SPDR Dow Jones Industrial Average ETF (DIA - Free Report) ) and Invesco QQQ Trust (QQQ - Free Report) ) lost more than 3% on Dec 4. An inverted yield curve led to the rout while renewed trade tensions kept the broader market in the troubled spot. Stocks were edgy on Dec 6 too.
Investors should note that though there was temporary reconciliation in the U.S.-Sino trade relations in the recently-concluded G-20 meet, concerns flared up after Canada arrested Huawei Technologies Co.’s Chief Financial Officer Wanzhou Meng, who is wanted by U.S. authorities for supposedly violating Iran sanctions. iShares Asia 50 ETF (AIA - Free Report) lost about 1.7% on Dec 6 and will likely rattle the global market.
Apart from the Trump-and-trade-induced fear, there has been a heightened concern about recession as part of the U.S. yield curve inverted for the first time in more than a decade, a phenomenon that had appeared before previous recessions.
Yields on short-term rates are rising pretty fast due to the hawkish Fed policy while concerns of peaking growth and renewed trade tensions led to a decline in long-term U.S. treasury yields. This is resulting in flattening of the yield curve, hinting at a weakening economy (read: Bank Stocks in Bear Market: Short Sector With These ETFs).
If these were not enough, OPEC ended the meeting without a decision on how much crude should be taken off the market. This delay in decision-making along with record U.S. crude supply weighed on oil prices. United States Oil (USO - Free Report) lost 2.2% on Dec 6 and is likely to decline further if the situation remains the same.
Why Value?
Given the Trump-Fed-and-OPEC-induced volatility, mainly pertaining to foreign relationships, interest rate policy and oil output cut, picking value securities in this capitalization level allows investors to earn more returns. Since political issues will likely keep the broader market on the edge, staying on the value spectrum seems wiser for now.
Investors should note that large-cap value ETF iShares Russell 1000 Value ETF (IWD - Free Report) hauled in about $794.7 million in new assets in the week Nov 28-Dec 4, making a place in the top 10 asset grossers (see all large-cap value ETFs here).
We have found a number of large-cap value ETFs, each of which has a lower P/E ratio than SPY (18.28x).
WBI Power Factor High Dividend ETF (WBIY - Free Report) ) — 10.18x
The underlying index of the fund looks to track the performance of 50 U.S.-listed stocks among large, mid and small-caps, which exhibit high dividend yield and strong fundamentals. It yields 4.12% annually (read: 5 Dividend ETFs Worth Buying Now).
Legg Mason International Low Volatility High Dividend ETF (LVHI - Free Report) ) – 10.70x
The underlying QS International Low Volatility High Dividend Hedged Index is composed of equity securities of developed markets outside the United States with relatively high yield and low price and earnings volatility while mitigating exposure to fluctuations between the values of the U.S. dollar and other international currencies. It yields 5.2% annually.
The underlying index of the fund tracks the performance of stocks in the S&P 500 Index that have the highest value score. It yields 3.25% and has a Zacks Rank #1 (Strong Buy).
AAM S&P 500 High Dividend Value ETF (SPDV - Free Report) ) – 13.24x
The underlying S&P 500 Dividend and Free Cash Flow Yield Index is a rules-based, equal-weighted index that is designed to give focus on the components of the S&P 500 Index that exhibit both high dividend yield and sustainable dividend distribution characteristics, while maintaining diversified sector exposure. It yields 3.08%.
Invesco Russell Top 200 Pure Value ETF ) – 13.43x
The underlying Russell Top 200 Pure Value Index is composed of securities with strong value characteristics selected from the Russell Top 200 Index. It yields about 2.72% and has a Zacks Rank #3 (Hold).
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5 Low P/E Lucrative Value ETF Picks
Wall Street went into a tailspin on Dec 4, snapping the decent start to the month and indicating no relief to the bloodbath since late-September. Since then, more than $3 trillion has been erased from the market.
Three key U.S. indexes SPDR S&P 500 ETF (SPY - Free Report) ), SPDR Dow Jones Industrial Average ETF (DIA - Free Report) ) and Invesco QQQ Trust (QQQ - Free Report) ) lost more than 3% on Dec 4. An inverted yield curve led to the rout while renewed trade tensions kept the broader market in the troubled spot. Stocks were edgy on Dec 6 too.
Investors should note that though there was temporary reconciliation in the U.S.-Sino trade relations in the recently-concluded G-20 meet, concerns flared up after Canada arrested Huawei Technologies Co.’s Chief Financial Officer Wanzhou Meng, who is wanted by U.S. authorities for supposedly violating Iran sanctions. iShares Asia 50 ETF (AIA - Free Report) lost about 1.7% on Dec 6 and will likely rattle the global market.
Apart from the Trump-and-trade-induced fear, there has been a heightened concern about recession as part of the U.S. yield curve inverted for the first time in more than a decade, a phenomenon that had appeared before previous recessions.
Yields on short-term rates are rising pretty fast due to the hawkish Fed policy while concerns of peaking growth and renewed trade tensions led to a decline in long-term U.S. treasury yields. This is resulting in flattening of the yield curve, hinting at a weakening economy (read: Bank Stocks in Bear Market: Short Sector With These ETFs).
If these were not enough, OPEC ended the meeting without a decision on how much crude should be taken off the market. This delay in decision-making along with record U.S. crude supply weighed on oil prices. United States Oil (USO - Free Report) lost 2.2% on Dec 6 and is likely to decline further if the situation remains the same.
Why Value?
Given the Trump-Fed-and-OPEC-induced volatility, mainly pertaining to foreign relationships, interest rate policy and oil output cut, picking value securities in this capitalization level allows investors to earn more returns. Since political issues will likely keep the broader market on the edge, staying on the value spectrum seems wiser for now.
Investors should note that large-cap value ETF iShares Russell 1000 Value ETF (IWD - Free Report) hauled in about $794.7 million in new assets in the week Nov 28-Dec 4, making a place in the top 10 asset grossers (see all large-cap value ETFs here).
We have found a number of large-cap value ETFs, each of which has a lower P/E ratio than SPY (18.28x).
WBI Power Factor High Dividend ETF (WBIY - Free Report) ) — 10.18x
The underlying index of the fund looks to track the performance of 50 U.S.-listed stocks among large, mid and small-caps, which exhibit high dividend yield and strong fundamentals. It yields 4.12% annually (read: 5 Dividend ETFs Worth Buying Now).
Legg Mason International Low Volatility High Dividend ETF (LVHI - Free Report) ) – 10.70x
The underlying QS International Low Volatility High Dividend Hedged Index is composed of equity securities of developed markets outside the United States with relatively high yield and low price and earnings volatility while mitigating exposure to fluctuations between the values of the U.S. dollar and other international currencies. It yields 5.2% annually.
Invesco S&P 500 Enhanced Value ETF (SPVU - Free Report) ) – 12.17x
The underlying index of the fund tracks the performance of stocks in the S&P 500 Index that have the highest value score. It yields 3.25% and has a Zacks Rank #1 (Strong Buy).
AAM S&P 500 High Dividend Value ETF (SPDV - Free Report) ) – 13.24x
The underlying S&P 500 Dividend and Free Cash Flow Yield Index is a rules-based, equal-weighted index that is designed to give focus on the components of the S&P 500 Index that exhibit both high dividend yield and sustainable dividend distribution characteristics, while maintaining diversified sector exposure. It yields 3.08%.
Invesco Russell Top 200 Pure Value ETF ) – 13.43x
The underlying Russell Top 200 Pure Value Index is composed of securities with strong value characteristics selected from the Russell Top 200 Index. It yields about 2.72% and has a Zacks Rank #3 (Hold).
Want key ETF info delivered straight to your inbox?
Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>