Stock ETFs that focus on the value style have been outperforming for much of the year and continue to outpace the growth category after Donald Trump clutched the presidential elections.
For instance, among the best performing large-cap value ETFs over the past month, the Guggenheim S&P 500 Pure Value ETF (NYSEArca: RPV) rose 8.1%, First Trust Large Cap Value AlphaDEX Fund (NasdaqGM: FTA) gained 7.7% and PowerShares Russell Top 200 Pure Value Portfolio (NYSEArca: PXLV) increased 7.2%.
In comparison, the benchmark S&P 500 Index returned 2.9% over the past month while the growth category underperformed both the value and blended categories, with the S&P 500 Growth Index up 0.7%.
As with most ETF investments, investors should watch their underlying holdings, and the most recent outperformance in the value-oriented ETFs may be attributed to their sector weights.
Looking at the value ETF’s underlying holdings, investors may notice the ETFs are overweight outperforming areas of the market, notably financials, energy industrials. Specifically, RPV shows a hefty 30.6% tilt toward financials, 11.2% to industrials and 8.7% energy. FTA includes 27.9% financials, 12.4% industrials and 5.5% energy. PXLV holds 39.3% financials, 18.2% energy and 8.4% industrials. However, the performance of the value ETF portfolios have been slightly pared down by their large 10% plus weights toward the utilities sector, which has been the worst performing area of the market over the past month.