CNBC recently highlighted the woes of Greenlight Capital hedge fund manager David Einhorn, a noted value investor, who has investors fleeing his fund after posting an 18.7 percent loss year-to-date and a 7.7 percent loss in the month of June alone. Nonetheless, it could present an opportunity for value-focused ETFs to shine when value investing falls back into favor with investors.
The latest bull market since February has been largely attributed to returns seen in stocks featuring high-growth and momentum, according to Robert Buckland of Citi Research.
“This usually favors growth and momentum trades and has produced bubbles in the past,” said Buckland. “These can be career-threatening for value managers.”
Related: Value ETFs Lag Growth, Momentum Counterparts
The Russell 2000, which tracks growth-oriented small-cap stocks, has been on a fortuitous path since February, gaining 16.45 percent since reaching a low in February.
Value investing, the strategy that involves finding stocks that are priced less than their intrinsic value, can still be a viable strategy and could be poised for a comeback with investors. Here are three ETFs that would make one of the forefathers of value investing, Benjamin Graham, and the man who made it famous, Warren Buffett, proud.
1. Utilities Select Sector SPDR ETF (NYSEArca: XLU)
XLU seeks investment results that correspond to the performance of companies in the Utilities Select Sector Index–utility sectors are typically revered by value investors for their safety and stability. XLU invests 95 percent of its total assets in the securities that comprise the index that operate within industries, such as electric utilities, water utilities, multi-utilities, independent power producers, energy traders, and gas utilities. XLU is up 0.28 percent for the year, 3.39 percent in the past year and 11.56 percent the last three years.
2. iShares MSCI EAFE Value ETF (BATS: EFV)
EFV tracks the investment results of the MSCI EAFE Value Index–an index that measures the equity market performance of equity securities outside the U.S. and Canada. EFV invests at least 90% of its assets in securities within the underlying index, including those that operate in Europe, Australasia and the Far East. EFV diversifies itself by spreading assets among various sectors like basic materials, consumer cyclicals and utilities to name a few. While it’s down 4.42 percent year-to-date, it boasts a 3.52 percent return the past year.
3. Invesco Dynamic Large Cap Value ETF (NYSEArca: PWV)
PWV tracks the investment results of the Dynamic Large Cap Value IntellidexSM Index. PWV holds 90 percent of its total assets in common stocks of large capitalization companies comprising the underlying intellidex, which has 50 large capitalization U.S. value stocks based on capital appreciation potential. The majority of its holdings are focused within the financial and technology sectors. PWV is up 0.43 percent the past year and 7.66 percent the last three years.
Related: 10 Growth ETF Ideas as Value ETFs Experience Block Selling
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