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Value Outshines Growth: 5 ETF Winners

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With increased optimism on swift economic recovery backed by the wider rollout of COVID-19 vaccines and more stimulus, value stocks have been outperforming the growth ones.

This is especially true as iShares Russell 1000 Value ETF (IWD - Free Report) , which targets the value segment, has risen 5.4% over the one-month period compared with a loss of 2.4% for its growth counterpart iShares Russell 1000 Growth ETF (IWF - Free Report) . According to the Sam Hendel, Levin Easterly Partners, as told in Yahoo Finance, this month has actually seen the largest outperformance of value versus growth in the last 20 years.

Value Edge Over Growth

Surging Treasury yields and the resultant inflationary pressure have been weighing on investors’ sentiment lately and compelled investors to rotate out of the high-growth areas into the low-valued stocks. Investors should note that the value stocks were badly beaten down by the coronavirus pandemic and are thus attractively valued at the current levels (read: 5 ETFs to Ride On the Rotation to Cyclical Sectors).

With continued progress in more vaccines, rapid vaccination rollout and the prospect of further U.S. stimulus, the economy is on the mend with swift recovery expectation. The combination of factors will result in increased industrial activity and pickup in consumer demand, thereby lifting value stocks. Improvement in corporate earnings growth also bodes well for these stocks.

Further, value stocks seek to capitalize on the inefficiencies in the market and have the potential to deliver higher returns with lower volatility compared with the 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: US Dividends Jump to Record High Amid Pandemic: ETFs to Tap).

Given this, investors seeking to tap the current trends could consider the value ETFs. We have presented a bunch of those that are at the forefront of the current stock rotation and are not confined to a particular sector or industry. These funds are expected to continue performing well in the coming weeks.

iShares Focused Value Factor ETF (FOVL - Free Report) – Up 15.1%

This ETF tracks the Focused Value Select Index and offers exposure to the performance of 40 U.S. large and mid-cap companies with prominent value characteristics. It holds 40 stocks in its basket with each making up for less than 4.6% of assets. The fund has gathered $30.8 million in its asset base and charges 25 bps in annual fees per year.

Invesco S&P SmallCap 600 Pure Value ETF (RZV - Free Report) – Up 13.8%

This fund provides exposure to the pure value segment of the small-cap market by tracking the S&P SmallCap 600 Pure Value Index. It has a well-diversified portfolio of 168 stocks with each security holding less than 1.8% of assets. The product has been able to manage $207.2 million in its asset and charges 35 bps in fees per year from investors. It has a Zacks ETF Rank #3 (Hold) with a High risk outlook (read: 5 Small-Cap ETFs at the Forefront of the 2021 Market Rally).

Avantis U.S. Small Cap Value ETF (AVUV - Free Report) – Up 11.7%

This fund invests in a broad set of U.S. small-cap companies and is designed to increase expected returns by focusing on firms trading at have low valuations with higher profitability ratios. It tracks the Russell 2000 Value Index and holds well-diversified 559 stocks in its basket. The fund has gathered $767.3 million in its asset base and charges 25 bps in annual basis.

Roundhill Acquirers Deep Value ETF (DEEP - Free Report) – Up 11.3%

With AUM of $33.6 million, this ETF offers exposure to deeply undervalued stock by tracking the performance of the Acquirers Deep Value Index. Holding 100 stocks in its basket, it is widely spread across components with none accounting for more than 1.4% of assets. The product charges 80 bps in fees from investors per year.

Invesco S&P 500 Pure Value ETF (RPV - Free Report) – Up 9.4%

This ETF follows the S&P 500 Pure Value Index, which measures the performance of securities that exhibit strong value characteristics in the S&P 500 Index. It holds 123 securities in its basket with each accounting for less than 2.3% share. The fund has amassed $1.4 billion in its asset base and charges 35 bps in annual fees. It has a Zacks ETF Rank #3 with a Medium risk outlook (read: Using ETFs to Buy Deep Value Stocks).

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