Aided in part by the stretch valuations and recent decline of once sought-after sectors such as Internet, social media and biotechnology, value stocks are getting closer looks by investors.
Looking at the performance of the utilities sector, investors have been benefiting from at least one value bet since the start of this year. On a year-to-date basis, the Utilities Select Sector SPDR (NYSEArca: XLU) is by far the best of the nine sector SPDR ETFs.
As the rotation to value from growth has intensified in recent weeks, investors are also increasingly eying consumer staples and industrial ETFs. [Industrial ETFs Come Back as Momentum Sectors Falter]
With some broad market ETFs that emphasize value stocks are acting growthier than their growth ETF counterparts, investors may want to consider a diversified alternative in their value hunts. One option is the PowerShares Fundamental Pure Large Value Portfolio (NYSEArca: PXLV). [Value ETFs Back in Style]
An intelligent index ETF, PXLV tracks the RAFI Fundamental Large Value Index. The index pulls is its constituents from a universe of 2,500 large value stocks, according to PowerShares.
The result is an ETF with 88 holdings and some obvious markings of a value proposition. For example, the average market value of PXLV’s holdings is $143.4 billion, emphasizing the ETF’s mega-cap tilt. PXLV has a P/E ratio of 14 and a price-to-book ratio of 1.59, according to issuer data. PowerShares bases its “fundamental” methodology on available book value, cash flow averaged over the last five years, sales averaged over the last five years and total dividends distributed over the last five years. [A Look at Some PowerShares ETFs]
True to its growth roots, PXLV almost steers clear of growthier consumer discretionary and technology stocks as those sectors combine for less than 7% of the ETF’s weight. In terms of value or perceive value, energy, consumer staples and telecom combine for over 42% PXLV. The ETF’s top-10 holdings feature eight Dow stocks lead by Exxon Mobil (NYSE: XOM) at a weight of almost 8.5%.