Value investing is a popular long-term investment strategy. Value stocks have historically outperformed growth stocks, or companies with high earnings expectations, in almost every market over the long-haul. For instance, the MSCI USA Value Index has outperformed the MSCI USA Growth Index by an annualized 81 basis points since 1974 through September 2015.
ETF investors also have a number of value options at hand. The Schwab U.S. Large-Cap Value ETF (NYSEArca: SCHV) is the cheapest option with a 0.07% expense ratio, and the Vanguard Value ETF (NYSEArca: VTV) is another cheap option with a 0.09% expense ratio. Both SCHV and VTV track some the cheapest U.S. large-cap stocks on the market and weight holdings based on market capitalization.
For S&P 500 index exposure, the Guggenheim S&P 500 Pure Value ETF (NYSEArca: RPV) targets the cheapest third of the benchmark.
Additionally, while the PowerShares FTSE RAFI US 1000 Portfolio (NYSEArca: PRF) does not seek to target value stocks, the RAFI fundamental indexing methodology, which screens for sales, book value, cash flow and dividends, does target companies with relatively cheap valuations and trims exposure to pricier stocks.
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Max Chen contributed to this article.