“But everyone rejoicing the return of value also is facing a frightening reality: Lately the results haven’t been keeping up with the enthusiasm. Last week, the market-neutral, or long-short, version of the value category, also known as a factor, posted its worst two-day return in more than five years, according to Bloomberg portfolio analytics,” reports Dani Burger for Bloomberg.
The Guggenheim S&P Smallcap 600 Pure Value ETF (NYSEArca: RZV) has also been a standout small-cap value play. RZV has been the best performing small-cap ETF since Election Day.
The outperformance may be attributed to the small-cap, value-oriented ETFs’ tilt toward favorable sectors in the current market environment. Specifically, financials and industry, two outperforming sectors in recent weeks, make up a large portion of the funds’ underlying holdings.
“Still, it’s difficult for value to sustain a long uninterrupted run. As a factor, it’s highly cyclical, so the returns are typically choppy with periods of underperformance mixed in with times of strength. In the four days ending last Friday, the market-neutral growth factor topped value by remaining relatively unchanged as value sunk 0.8 percent,” according to Bloomberg.
As is the case with so many Vanguard ETFs, VTV has gained a following due to its paltry expense ratio. VTV charges just 0.09% per year, making it less than expensive than 92% of competing funds, according to issuer data.
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