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Value Investing Wins in 1H: 7 Best-Performing ETFs

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Wall Street has been enjoying a huge rally this year thanks to a speedy economic recovery fueled by a rapid pace of vaccinations, progress of more stimulus and expanded stimulus. However, inflation fears kept investors edgy.

While the gains were broad based, value investing has been outperforming. This is especially true as iShares Russell 1000 Value ETF (IWD - Free Report) , which targets the value segment, has risen 16.1% so far this year compared with a gain of 11.1% for its growth counterpart iShares Russell 1000 Growth ETF (IWF - Free Report) (read: Growth ETFs Make a Comeback As Market Hits New Peak).

Reasons for Outperformance

Value stocks, which have strong fundamentals — earnings, dividends, book value and cash flow — and trade below their intrinsic value, have been benefiting from the growth in the economy. A measure of U.S. factory activity climbed to a record high in June bolstering economists' expectations for double-digit growth in the second quarter. U.S. consumer sentiment rebounded in early June as inflation fears subsided and households grew more optimistic about future economic growth and employment. Meanwhile, U.S. manufacturing activity hit a record high in May for the second straight month supported by stronger expansion in output and new orders.

Additionally, the government has injected trillions of dollars into the financial market and the economy, which is acting as a major catalyst for value stocks as consumer spending has increased as a result of the growth in money supply. Vaccination programs coupled with additional infrastructure spending is also adding to the strength. This combination of factors has resulted 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: The Hottest Value Stock ETFs to Buy Now).

Given this, we have presented a bunch of ETFs that are at the forefront of the value outperformance and are not confined to a particular sector or industry. These funds are expected to continue performing well in the coming weeks.

Invesco S&P SmallCap 600 Pure Value ETF (RZV - Free Report) – Up 43.8%

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 167 stocks with each security holding less than 2.6% of assets. The product has been able to manage $388.7 million in its assets and charges 35 bps in fees per year from investors. It trades in an average daily volume of 39,000 shares and has a Zacks ETF Rank #3 (Hold) with a High risk outlook (read: Small Caps Enjoy Longest Run Since 1995: 5 ETF Winners).

Avantis U.S. Small Cap Value ETF (AVUV - Free Report) – Up 33.9%

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 low valuations with higher profitability ratios. It tracks the Russell 2000 Value Index and holds well-diversified 614 stocks in its basket. The fund has gathered $1.3 billion in its asset base and charges 25 bps in annual basis. It trades in an average daily volume of 152,000 shares.

iShares Focused Value Factor ETF (FOVL - Free Report) – Up 29.9%

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 has gathered $38.4 million in its asset base and trades in volume of 16,000 shares a day on average. The fund charges 25 bps in annual fees per year.

Roundhill Acquirers Deep Value ETF (DEEP - Free Report) – Up 26.1%

With AUM of $50.7 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 1.1% of assets. The product charges 80 bps in fees from investors per year and sees an average daily volume of 13,000 shares.

Invesco S&P 500 Pure Value ETF (RPV - Free Report) – Up 25.9%

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 121 securities in its basket with each accounting for less than 2.3% share. The fund has amassed $3 billion in its asset base and charges 35 bps in annual fees. It trades in an average daily volume of 816,000 shares and has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: 5 Great Value ETFs to Buy as Inflation Fears Grip Markets).

Invesco S&P MidCap 400 Pure Value ETF (RFV - Free Report) – Up 25.3%

This fund provides pure exposure to the mid-cap value segment of the U.S. equity market by tracking the S&P MidCap 400 Pure Value Index. With AUM of $195.1 million, it holds 105 stocks in its basket. The product charges 35 bps in fees per year and trades in an average daily volume of 26,000 shares. It has a Zacks ETF Rank #2 with a High risk outlook.

Invesco S&P 500 Enhanced Value ETF (SPVU - Free Report) – Up 25%

This fund follows the S&P 500 Enhanced Value Index, holding 101 stocks in its basket. It has accumulated $136.7 million in AUM while trades in a light average daily volume of 33,000 shares. The product charges 13 bps in annual fees and has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook (read: Bet on These Top Value ETFs Now).

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