ETFs Under the Hood: The Value-Focused PWV | ETF Trends

The rotation from growth to value continues, and investors who who want in might want to consider large cap-focused funds like the Invesco Dynamic Large Cap Value ETF (PWV). But should investors go all-in on value?

PWV is based on the Dynamic Large Cap Value Intellidex℠ Index (Index). The Fund will normally invest at least 90% of its total assets in common stocks that comprise the Index.

As far as the index goes, it is designed to provide capital appreciation while maintaining consistent stylistically accurate exposure. The Style Intellidexes apply a rigorous 10 factor style isolation process to objectively segregate companies into their appropriate investment style and size universe.

The Fund and the Index are rebalanced and reconstituted quarterly in February, May, August, and November. When you pop the hood of PWV, you don’t see the familiar high-flying tech names like Amazon or Apple, but a mix of financial and industrial names like JP Morgan Chase, Bank of America, and Pepsi Co in its top 10 holdings (as of November 18).

PWV Chart

A COVID-19 pandemic is certainly driving a lot of investors towards more value-oriented funds. As investors weigh in on the possibilities of a vaccine, the rotation continues.

Furthermore, PWV can be used as a value complement to a growth-oriented fund if they wish. Some analysts question whether investors should dump growth completely.

“Optimism driven by progress towards a Covid-19 vaccine has prompted many investors around the world to ditch several of 2020’s high-flying stocks – the ones that benefitted from the impact of the pandemic – and buy ones that were beaten down by coronavirus,” said Nigel Green, chief executive and founder of deVere Group in an email. “In the last few days, there’s been a historical, violent rotation from growth and momentum stocks, like stay-at-home tech, to value funds, including financials and industrials, as a result of the positive vaccine news.”

“Hopes for a potential vaccine are legitimate and the developments are, without question, positive news for humanity,” Green added. “However, The Great Rotation could be misguided and could catch-out investors They might be looking ahead to the post-pandemic era with a virus-free economy, but the world, the global economy, how we live, do business and interact remains fundamentally changed.”

That said, spreading capital to value funds like PWV and other factors as opposed to going all-in on value makes more sense.

“The best way for investors to position themselves for the opportunities and to mitigate risks is to have a broad spread of investments, and not to try to second guess the market,” Green concluded.

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