Michael Krause with TheStreet.com has some conclusions contrary to popular belief about exchange traded funds (ETFs). As president of Alta Vista Research he has done quite a bit of research on ETFs. Here’s what he has to say:

  • Value Continues To Outperform Growth: Value stocks have outperformed growth stocks for 6 years in a row and the methodology of choosing companies for the iShares S&P 500 Growth Index (IVW) and the iShares S&P 500 Value Index(IVE) doesn’t decipher between fast and slow earnings growth.
  • Besides China, Emerging Markets Continue To Do Well: Krause advises against pulling out of this sector that many feel is overdue for a fall. The p/e ratio is still low in emerging markets stocks despite the run-up in the past few years. iShares MSCI Emerging Markets Index (EEM) offers fast earnings growth.
  • Fundamental Indexing Proves its mettle: This strategy avoids traditional market-cap weighted indices, and has outperformed market weighted indices lately.  There are several approaches and ETFs available for fundamental indexing.

For full disclosure, some of Tom Lydon’s clients own IVW and EEM.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.