Year to date through September, SPYG’s 17.0% total return was modest higher than SCHG and MTUM.
Sticking to the value side of the investment spectrum, iShares S&P 500 Value (IVE) held more in Communications Services (7%) of assets than in Consumer Discretionary (6%). Former telecom services stocks AT&T (T) and VZ are joined by former consumer stocks Comcast (CMCSA) and DIS in the new sector.
However, peer Vanguard Value Index ETF (VTV) has a 5% weighting in Communications Services, but a 15% weighting in Information Technology (higher than the 6% in IVE). Here too a hefty stake in MSFT contributes to the large weighting in the tech sector.
Year to date, VTV’s 6.0% total return was nearly double the 3.3% gain for IVE, highlighting the difference in the exposure similarly sounding ETFs provide.
While the sector weightings of these style-oriented ETFs will shift as the growth/momentum or value criteria is revisited per index rules, there are no sector constraints in building these portfolios. As such, we think investors need to look inside and understand how much exposure they have to the three impacted sectors.
CFRA will be hosting a webinar “Seasons Change, Sectors Change” on October 9 to address seasonality and ETFs worthy of focus in the fourth quarter. To register visit https://go.cfraresearch.com/WebinarSeasonsChange.
Todd Rosenbluth is Director of ETF & Mutual Fund Research at CFRA.