Market gyrations have been a common phenomenon in 2022. After some rally in the early part of last week (for the week ending Feb 11), major broader indices ended the week in the red due to red-hot inflation readings and intensifying geopolitical tensions. Last week, a solid fourth-quarter earnings season and an improving labor market kept market participants upbeat.
Global markets were hurt by the escalating tensions between Russia and Ukraine on Feb 11. This led to an increase in oil prices as well. The market participants were already dealing with red-hot inflation readings as the consumer price index (CPI) jumped 7.5% year over year in January, marking the largest 12-month gain since February 1982. The high inflation has set the tone for the first interest rate hike as soon as March.
The core inflation index, which excludes volatile components such as food and energy prices, rose 6% year over year, marking the highest growth since August 1982. Energy prices remained a key contributor to the inflation numbers, with a 27% year-over-year increase.
Going on, U.S. consumers have started feeling the pressure of the rising inflation levels. Consequently, the University of Michigan’s preliminary consumer sentiment reading for February stood at 61.7, declining from 67.2 in the previous month and lagging expectations (per a CNBC article).
Value ETFs in Focus
Investors have been upbeat about the accelerated coronavirus vaccine rollout, solid fiscal stimulus support and reopening of the U.S. economy, which may lead to faster U.S. economic recovery from the pandemic-led economic slowdown. These factors created a conducive environment for value investing.
It is worth noting here that value investing seems more lucrative, given the rebounding U.S. economy, the expectation of higher inflation and chances of Fed interest rate hikes. Moreover, value stocks seek to capitalize on market inefficiencies. They can deliver higher returns with lower volatility than their growth and blend counterparts. Additionally, value stocks are less exposed to trending markets and their dividend payouts offer a shield against market turbulence.
Against this backdrop, here are some top-ranked value ETFs that investors can consider betting on:
iShares S&P 500 Value ETF ( IVE Quick Quote IVE - Free Report)
iShares S&P 500 Value ETF provides exposure to large U.S. companies that are potentially undervalued relative to comparable companies. With AUM of $24.74 billion, it charges 18 basis points (bps) in expense ratio. The fund carries a Zacks Rank #1 (Strong Buy) (read:
Bet on These 5 Top-Ranked ETFs Amid Tough Market Conditions). Vanguard Mega Cap Value ETF ( MGV Quick Quote MGV - Free Report)
With AUM of $5.18 billion, Vanguard Mega Cap Value ETF tracks the performance of the CRSP US Mega Cap Value Index. It charges a fee of 7 bps and has a Zacks Rank #1 (read:
ETF Areas to Consider for Rotating Out of Tech in 2022). Schwab U.S. Large-Cap Value ETF ( SCHV Quick Quote SCHV - Free Report)
Schwab U.S. Large-Cap Value ETF’s goal is to track as closely as possible, before fees and expenses, the total return of the Dow Jones U.S. Large-Cap Value Total Stock Market Index. With AUM of $10.36 billion, it charges 4 bps in expense ratio. The fund has a Zacks Rank #1.
Invesco S&P 500 Enhanced Value ETF ( SPVU Quick Quote SPVU - Free Report)
Invesco S&P 500 Enhanced Value ETF is based on the S&P 500 Enhanced Value Index. With AUM of $188.9 million, it charges 13 bps in expense ratio. The fund carries a Zacks Rank #1 (read:
5 Must-Buy ETFs With Fed Tightening in the Cards). Vanguard S&P 500 Value ETF ( VOOV Quick Quote VOOV - Free Report)
With AUM of $2.82 billion, the Zacks Rank #1 Vanguard S&P 500 Value ETF tracks the performance of the S&P 500 Value Index. It charges a fee of 10 bps.
SPDR Portfolio S&P 500 Value ETF ( SPYV Quick Quote SPYV - Free Report)
SPDR Portfolio S&P 500 Value ETF seeks to provide investment results that, before fees and expenses, generally correspond to the total return performance of the S&P 500 Value Index. With AUM of $14.28 billion, it charges 4 bps in expense ratio. The fund carries a Zacks Rank #1.