Value Stocks Look Compelling as Tech Sector Slumps

Tech stocks are lagging the broader market this month, signaling potential strength for value stocks.

September to date, the technology sector is lagging the S&P 500 by the most for a month since November 2018, the Wall Street Journal reported. The benchmark is down 1.4% as of September 15, while the technology sector has slipped 4.5% during that period.

Tech stocks are positioned to be among the most affected by higher for longer interest rates. The Federal Reserve’s Federal Open Market Committee (FOMC) will meet this week to discuss interest rates, with the market expecting officials will hold rates steady. There is still a decent possibility of another hike before the end of the year, according to analysts.

Expectations for when the Fed will begin to cut rates continue to be pushed off further. The Journal reported traders assigned a 57% probability to a lower Fed target rate by June 2024 last Friday, down from the 81% probability they assigned a month earlier, according to CME Group’s FedWatch tool.

Disappointing performance from tech stocks coupled with higher volatility could support value stocks in the current environment.

Access Value Stocks with Multifactor ETF ROUS

Multifactor ETFs are a compelling solution for investors who want to add exposure to value stocks. Multifactor ETFs seek to target desired return-enhancing factors and reduce exposure to unrewarded risk exposures.

See more: “Multifactor ETFs Helped Protect Gains Last Month

A defensive value ETF like the Hartford Multifactor US Equity ETF (ROUS) can help investors maintain desired exposure more comfortably during choppy markets. ROUS seeks to provide more balanced exposure to U.S. large-caps while also dampening volatility compared to benchmarks.

The ETF seeks to outperform traditional cap-weighted indexes and reduce volatility by 15% over a full market cycle.

For more news, information, and analysis, visit the Multifactor Channel.

Investing involves risk, including the possible loss of principal.

This article was prepared as part of Hartford Funds’ paid sponsorship with VettaFi. Hartford Funds is not affiliated with VettaFi and was not involved in drafting this article. The opinions and forecasts expressed are solely those of VettaFi. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, a recommendation for any product, or as investment advice.