Exchange traded funds that emphasize the widely followed value factor are on the comeback trail this year after several years of noticeably lagging their growth and momentum rivals.
Plain vanilla index ETFs that track the value theme has outperformed so far this year, or at least have not done as poorly as broader benchmarks. Nevertheless, potential investors should still look under the hood of these value stock ETFs as no two are created alike and offer varying performances.
Popular value ETFs include the Vanguard Value ETF (NYSEArca: VTV). VTV follows the tracks the CRSP US Large Cap Value Index and is one of the most widely followed value ETFs. CRSP includes sales/price and historical earnings/price ratio as well as 12-month forward earnings/price ratio and dividend yield to form its value indexes.
Value has recently retreated and that theme could continue over the near-term as the energy and financial services sectors, frequently the two largest sector allocations in many value ETFs, historically lag in November.
That does not mean there is not opportunity with value ETFs. 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.[related_stories]