Value-based managers and investors of exchange traded funds (ETFs) are going through a tough time, despite claims of plentiful stock bargains.
Many value funds have sharply tumbled, with Bill Miller’s Value Trust down 29.3% and Morningstar’s large-value down 17.5% this year, says Joe Morris for Ignites. Miller predicts that when the housing crisis and credit crunch are finished, value funds and ETFs will have their day. Some critics disagree and take into consideration the fact that stocks are trading at their 2000 levels as of now.
Some investors have little to show for almost a decade’s time. Home prices have fallen, commodities prices have risen and inflation is looming. How value will behave in these circumstances is yet to be seen. A longer downturn could make value investors and managers feel helpless.
In the near-term, value has been doing a little better. In the last three months, though, it’s weaker than the growth and blend categories across the small-, mid- and large-cap ETFs.
- iShares S&P 500 Value Index (IVE): down 11% for three months; up 4.8% for one month
- iShares S&P Mid Cap 400 Value Index (IJJ): down 6.8% for three months; up 4.4% for one month
- iShares S&P Small Cap 600 Value Index (IJS): down 2% for three months; up 8.5% for one month
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.