The markets finally took a breather during Tuesday’s trading session as the Dow Jones Industrial Average snapped a six-day winning streak. Nonetheless, as the U.S. economy looks to slowly phase in a reopening following the pandemic, investor interest could be shifting from the momentum factor to the value factor.
It’s a plausible notion given that a lot of question markets remain following the pandemic. With more economic data on the way and an election to boot, uncertainty could be enough reason to tilt to value.
Another notable is focusing on quality, which is often mentioned in the same vein as value.
“To a great degree, the stocks that have been smashed during this crisis have been the economically-sensitive companies, including some of the deeply cyclical businesses,” said Bob Wyckoff of investment firm Tweedy Browne (which has various value-tilted funds), during an interview with Advisor Perspectives. “The higher quality companies and the interactive media and technology companies that the fund owns have held up better.”
In terms of quality, Wyckoff looks at businesses that show fair intrinsic value given the current state of the market.
“Our value mix has always had exposure to some higher-quality companies that are business compounders, where the price is still fair in relation to our estimate of intrinsic value as well as some economically sensitive businesses,” Wyckoff added.
To get exposure to some value-tilted funds, here are a few large cap ETFs to consider with varying strategies:
- Goldman Sachs ActiveBeta U.S. Large Cap Equity ETF (GSLC): seeks to provide investment results that closely correspond to the performance of the Goldman Sachs ActiveBeta® U.S. Large Cap Equity Index. The index is designed to deliver exposure to equity securities of large capitalization U.S. issuers.
- Goldman Sachs Equal Weight U.S. Large Cap Equity ETF (GSEW): seeks to provide investment results that closely correspond to the performance of the Solactive US Large Cap Equal Weight Index (GTR). The index consists of equity securities of large capitalization U.S. issuers. The index is an equal-weight version of the Solactive US Large Cap Index, a market capitalization-weighted index that includes equity securities of approximately 500 of the largest U.S. companies.
- Goldman Sachs JUST U.S. Large Cap Equity ETF (JUST): seeks to provide investment results that closely correspond to the performance of the JUST US Large Cap Diversified Index. The index is designed to deliver exposure to equity securities of large capitalization U.S. issuers that engage in “just business behavior” based on rankings produced by the index provider.
For more market trends, visit ETF Trends.
