With the coronavirus showing its tangible effects on the market this past week, a sharp shift to value investing might be an elixir investors need to help ease the headaches. As market experts caution investors to wait until we see the full scope of the coronavirus effects, there are value-oriented exchange-traded funds (ETFs) to consider.
“It is time to start thinking about favoring value,” said Mark Vaselkiv, chief investment officer for fixed income at T. Rowe Price, in a MarketWatch report. “The market is daring you to buy value today.”
“Because of risk aversion, the stocks and debt of high-quality companies look overvalued relative to those of more troubled “value” names that are out of favor because they have some flaws,” the report added.
It’s not just the coronavirus stoking fears in the market. As Treasury yields fall to new lows, an inverted yield curve, which can indicate that a recession could be forthcoming, is reentering the current financial vernacular once again and sparking fears in the bond markets.
This, coupled with the coronavirus concerns slowing global growth, could spark a move into more value-oriented equities in addition to the safety of government bonds. Here are a few funds that tilt towards value that investors should put on their watch lists:
- WisdomTree U.S. LargeCap Dividend Fund (NYSEArca: DLN): seeks to track the price and yield performance, before fees and expenses, of the WisdomTree U.S. LargeCap Dividend Index. The index is a fundamentally weighted index that is comprised of the large-capitalization segment of the U.S. dividend-paying market.
- WisdomTree U.S. MidCap Dividend Fund (NYSEArca: DON): seeks to track the price and yield performance, before fees and expenses, of the WisdomTree U.S. MidCap Dividend Index. The index is a fundamentally weighted index that is comprised of the mid-capitalization segment of the U.S. dividend-paying market.
- WisdomTree U.S. SmallCap Dividend Fund (NYSEArca: DES): seeks to track the price and yield performance, before fees and expenses, of the WisdomTree U.S. SmallCap Dividend Index. The index is a fundamentally weighted index measuring the performance of the small-capitalization segment of the U.S. dividend-paying market.
According to the WisdomTree website, value presents an opportune time for investors as “Growth has been outperforming for about a decade, but has been wobbly since mid-2019. The chart below shows the rolling 10-year performance of the stock market’s lowest price-to-earnings (P/E) value stocks against the highest P/E growth stocks. In the decade to February 2000, the most expensive stocks beat the cheapest by 2.7% a year, not much unlike the situation today.”
For more market trends, visit ETF Trends.