There are scores of exchange traded funds dedicated to the value factor on the market today. The PowerShares S&P 500 Value Portfolio (NYSEArca:SPVU) is one of the overlooked value options, but the fund is worth a look by value investors.

SPVU tracks the S&P 500 Enhanced Value Index, which focuses on 100 S&P 500 companies with the greatest value score calculated based on fundamental ratios of a company’s book value-to-price ratio, earnings-to-price ratio and sales-to-price ratio.

“Also important to note is the weighting mechanism employed by the two indices.  The S&P 500 Value simply weights securities by market cap, whereas the selection process and the weighting scheme of the S&P 500 Enhanced Value Index assigns higher weights to those securities with bigger value attributes,” according to S&P Dow Jones Indices.

Value stocks usually trade at lower prices relative to fundamental measures of value, like earnings and the book value of assets. On the other hand, growth-oriented stocks tend to run at higher valuations.

The value factor historically performs well over longer holdings, but a current challenge is the dearth of U.S. stocks considered credible value plays. The financial services sector is one of a small number of groups considered legitimate value destinations at the moment.

Subscribe to our free daily newsletters!
Please enter your email address to subscribe to ETF Trends' newsletters featuring latest news and educational events.