“Momentum stocks have shined this year. But we also favor the value factor, although some measure of caution has kept investors away from discounted segments of the market this year,” said BlackRock. “However, flows into exchange traded products (ETPs) suggest sentiment could be shifting (source: BlackRock as of 10/31/17). We believe that value could benefit from a solid macro outlook, as well as improved sentiment.”

According to Morningstar data, value stocks have underperformed growth stocks for the better part of the past decade. During this period, investors punished lower-valuation stocks and rewarded the higher-quality and momentum stocks, with growth and momentum both leading the charge in the current year.

VLUE holds nearly 150 stocks, but on its own, Apple Inc. (NASDAQ: AAPL) represents just over 10% of the ETF’s weight.

For more on smart beta ETFs, visit our Smart Beta Channel.

Tom Lydon’s clients own shares of Apple.

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