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After a banner year, Wall Street kicked off 2024 on a downbeat note as big tech faltered and yield rose. This reflects investors’ concern about the skyrocketing market after a sharp rally over the past two months, thereby driving the appeal for value investing, which indicates a big reversal from 2023, where growth investing took charge (read: Top Growth ETFs to Tap Declining Inflation Trends).
In fact, many value ETFs made a new 52-week high on the first trading day of 2024. We highlight five of these having a solid Zacks Rank #1 (Strong Buy) and are popular choices in the value space. These are Vanguard Value ETF (VTV - Free Report) , iShares Russell 1000 Value ETF (IWD - Free Report) , SPDR Portfolio S&P 500 Value ETF (SPYV - Free Report) , Vanguard Mega Cap Value ETF (MGV - Free Report) and iShares Edge MSCI USA Value Factor ETF (VLUE - Free Report) .
Value investing involves buying stocks that are believed to be undervalued or trading below their intrinsic worth. Value stocks 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. Value stocks are less susceptible to trending markets and their dividend payouts offer safety in times of market turbulence.
Market Action
iPhone maker Apple (AAPL - Free Report) declined after Barclays downgraded the rating on the stock, citing concerns about demand for new iPhones. Semiconductor stocks also saw rough trading after Dutch semiconductor manufacturing equipment maker ASML Holdings (ASML - Free Report) said it would restrict shipments of some technology to China at the Dutch government’s behest.
Meanwhile, yields climbed as enthusiasm for a Fed rate cut faded. While the Fed is widely expected to hold rates at its January meeting, traders expect a near 70% chance of a 25-bps cut in March, according to the CME Group's FedWatch tool (read: 5 Best Top-Ranked ETFs of 2023 Set to Soar in 2024).
The disappointing manufacturing data also added to the chaos. The U.S. manufacturing sector slipped further into contraction during December, according to the latest PMI data from S&P Global, as output declined and the downturn in new orders gathered pace.
The tech-heavy Nasdaq Composite Index was the biggest loser, shedding nearly 1.6%. The S&P 500 lost nearly 0.6%, while the Dow Jones Industrial Average was relatively flat near a record high.
Vanguard Value ETF targets the value segment of the broad U.S. stock market and follows the CRSP US Large Cap Value Index. It holds 342 stocks in its basket, with each accounting for less than 4% of the assets. Vanguard Value ETF has AUM of $106.2 billion and charges 4 bps in annual fees. The product trades in a volume of 2.6 million shares per day on average.
iShares Russell 1000 Value ETF offers exposure to U.S. companies that are thought to be undervalued by the market relative to comparable companies. It tracks the Russell 1000 Value Index and holds 850 well-diversified stocks in its basket. iShares Russell 1000 Value ETF has amassed $55.4 billion in its asset base and trades in an average daily volume of 3 million shares. It charges 19 bps in annual fees.
SPDR Portfolio S&P 500 Value ETF tracks the S&P 500 Value Index, charging investors 4 bps in annual fees. It holds 444 stocks in its basket, with each accounting for no more than 3.5% of assets. SPDR Portfolio S&P 500 Value ETF has amassed $20.1 billion in its asset base and sees an average daily volume of 3 million shares (read: S&P 500 ETF (SPY) Approaches $500B AUM Landmark).
Vanguard Mega Cap Value ETF follows the CRSP US Mega Cap Value Index, which measures the performance of the largest value stocks in the U.S. market. It holds 141 stocks in its basket, with each accounting for less than 4% of assets. Vanguard Mid-Cap Value ETF has amassed $6.5 billion and trades in an average daily volume of 197,000 shares. It charges 7 bps in fees per year.
iShares Edge MSCI USA Value Factor ETF offers exposure to large- and mid-cap U.S. stocks with value characteristics and relatively lower valuations and tracks the MSCI USA Enhanced Value Index. It holds 150 stocks in its basket, with each accounting for less than 7.7% of assets. iShares Edge MSCI USA Value Factor ETF has amassed $7 billion in its asset base and charges 15 bps in annual fees. It trades in an average daily volume of 373,000 shares.
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Value ETFs Reach New 52-Week High to Start 2024
After a banner year, Wall Street kicked off 2024 on a downbeat note as big tech faltered and yield rose. This reflects investors’ concern about the skyrocketing market after a sharp rally over the past two months, thereby driving the appeal for value investing, which indicates a big reversal from 2023, where growth investing took charge (read: Top Growth ETFs to Tap Declining Inflation Trends).
In fact, many value ETFs made a new 52-week high on the first trading day of 2024. We highlight five of these having a solid Zacks Rank #1 (Strong Buy) and are popular choices in the value space. These are Vanguard Value ETF (VTV - Free Report) , iShares Russell 1000 Value ETF (IWD - Free Report) , SPDR Portfolio S&P 500 Value ETF (SPYV - Free Report) , Vanguard Mega Cap Value ETF (MGV - Free Report) and iShares Edge MSCI USA Value Factor ETF (VLUE - Free Report) .
Value investing involves buying stocks that are believed to be undervalued or trading below their intrinsic worth. Value stocks 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. Value stocks are less susceptible to trending markets and their dividend payouts offer safety in times of market turbulence.
Market Action
iPhone maker Apple (AAPL - Free Report) declined after Barclays downgraded the rating on the stock, citing concerns about demand for new iPhones. Semiconductor stocks also saw rough trading after Dutch semiconductor manufacturing equipment maker ASML Holdings (ASML - Free Report) said it would restrict shipments of some technology to China at the Dutch government’s behest.
Meanwhile, yields climbed as enthusiasm for a Fed rate cut faded. While the Fed is widely expected to hold rates at its January meeting, traders expect a near 70% chance of a 25-bps cut in March, according to the CME Group's FedWatch tool (read: 5 Best Top-Ranked ETFs of 2023 Set to Soar in 2024).
The disappointing manufacturing data also added to the chaos. The U.S. manufacturing sector slipped further into contraction during December, according to the latest PMI data from S&P Global, as output declined and the downturn in new orders gathered pace.
The tech-heavy Nasdaq Composite Index was the biggest loser, shedding nearly 1.6%. The S&P 500 lost nearly 0.6%, while the Dow Jones Industrial Average was relatively flat near a record high.
ETFs at One-Year High
Vanguard Value ETF (VTV - Free Report)
Vanguard Value ETF targets the value segment of the broad U.S. stock market and follows the CRSP US Large Cap Value Index. It holds 342 stocks in its basket, with each accounting for less than 4% of the assets. Vanguard Value ETF has AUM of $106.2 billion and charges 4 bps in annual fees. The product trades in a volume of 2.6 million shares per day on average.
iShares Russell 1000 Value ETF (IWD - Free Report)
iShares Russell 1000 Value ETF offers exposure to U.S. companies that are thought to be undervalued by the market relative to comparable companies. It tracks the Russell 1000 Value Index and holds 850 well-diversified stocks in its basket. iShares Russell 1000 Value ETF has amassed $55.4 billion in its asset base and trades in an average daily volume of 3 million shares. It charges 19 bps in annual fees.
SPDR Portfolio S&P 500 Value ETF (SPYV - Free Report)
SPDR Portfolio S&P 500 Value ETF tracks the S&P 500 Value Index, charging investors 4 bps in annual fees. It holds 444 stocks in its basket, with each accounting for no more than 3.5% of assets. SPDR Portfolio S&P 500 Value ETF has amassed $20.1 billion in its asset base and sees an average daily volume of 3 million shares (read: S&P 500 ETF (SPY) Approaches $500B AUM Landmark).
Vanguard Mega Cap Value ETF (MGV - Free Report)
Vanguard Mega Cap Value ETF follows the CRSP US Mega Cap Value Index, which measures the performance of the largest value stocks in the U.S. market. It holds 141 stocks in its basket, with each accounting for less than 4% of assets. Vanguard Mid-Cap Value ETF has amassed $6.5 billion and trades in an average daily volume of 197,000 shares. It charges 7 bps in fees per year.
iShares Edge MSCI USA Value Factor ETF (VLUE - Free Report)
iShares Edge MSCI USA Value Factor ETF offers exposure to large- and mid-cap U.S. stocks with value characteristics and relatively lower valuations and tracks the MSCI USA Enhanced Value Index. It holds 150 stocks in its basket, with each accounting for less than 7.7% of assets. iShares Edge MSCI USA Value Factor ETF has amassed $7 billion in its asset base and charges 15 bps in annual fees. It trades in an average daily volume of 373,000 shares.