What’s the deal with the rate cut discussion? With the Fed meeting this week, investors are again trying to figure out when rates might drop. Not only when, but with inflation still stubborn, the number of cuts, too, may now be in question.
Though rates rose at a breakneck speed last year, have markets adapted to this high rate regime? Should rate cuts loom further in the distance, investors may want to revisit value investing via ETFs.
See more: As Nontech Stocks Rise, Consider Active ETF TSPA
Why look to value investing when areas like tech and crypto are standing out? The right value approach can still find opportunities in the tech landscape. Crafting an equities allocation without tech, growth, or value would be difficult. While rate cuts might benefit high-upside, debt-reliant tech companies, a value approach could find those proving their resilience despite high rates.
At the same time, a value approach could find strong firms outside of a super-tech-heavy market. Sectors like healthcare, for example, can diversify portfolios while also picking up strong firms in their own right.
An active approach to value investing could do particularly well. For example, investors might want to consider an ETF like the T. Rowe Price Value ETF (TVAL), which charges 33 basis points to look mostly in the large-cap space for firms that meet its fundamental research and bottom-up research screens.
With that approach, TVAL has returned 8.7% over the last three months. That has outperformed both its ETF Database Category and FactSet Segment averages. What’s more, having only launched last June, it has gathered solid AUM, reaching $65 million.
Value investing may stand out as rate cuts continue to disappear into the horizon. Rather than waiting for cuts that might not hit until the fall, if at all meaningfully, in 2024, investors may want to consider active value ETFs like TVAL.
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