For investors seeking momentum, SPDR S&P1500 Value Tilt ETF (VLU - Free Report) is probably on radar now. The fund just hit a 52-week high and is up about 14.2% from its 52-week low price of $85.23/share.
But are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed:
VLU in Focus
VLU provides exposure to stocks that exhibit the strongest value characteristics based on price to earnings ratio, price to cash flow ratio, price to sales ratio, price to book ratio, and dividends paid out. The fund overweighs stocks with relatively low valuation and does not put much weight on those with relatively high valuation. With a broad basket of 1344 stocks, it has key holdings in financials, information technology, healthcare, consumer discretionary, and industrials. It charges 12 basis points in annual fees (see: all the Large Cap ETFs here).
Why the Move?
The value corner of the broad U.S. stock market has been an area to watch given concerns over delay in the implementation of corporate tax cuts, flattening yield curve and falling oil prices that are making investors’ jittery. In particular, value funds have the potential to deliver higher returns and exhibit lower volatility compared with growth and blend counterparts. These stocks ensure safety to investors and outperform the growth ones across all asset classes when considered on a long-term horizon.
More Gains Ahead?
It seems that VLU might remain strong given a solid weighted alpha of 13.30% and a mediocre 20-day volatility of 18.77%. As a result, there is definitely still some promise for investors who want to ride on this surging ETF a little further.
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