Value investing has returned in full force, and investor interest is only picking up steam. ETF investors looking to get a slice of the value pie can look at funds like the iShares Russell 1000 Value ETF (IWD).
“Value stocks are sensitive to economic changes, and in 2021, value has outperformed growth,” a Guru Focus article noted. “The Russell 1000 Value Index, which measures the price performance of large-cap value companies, has increased close to 9% this year whereas the Russell 1000 Growth Index has appreciated just 0.13%.”
IWD seeks to track the investment results of the Russell 1000® Value Index, which measures the performance of large- and mid-capitalization value sectors of the U.S. equity market. The fund generally invests at least 90% of its assets in securities of the underlying index and in depositary receipts representing securities of the underlying index. It may invest the remainder of its assets in certain futures, options and swap contracts, cash, and cash equivalents, as well as in securities not included in the underlying index, but which the advisor believes will help the fund track the underlying index.
“Investors with a longer-term horizon should consider the importance of large cap value growth stocks and the benefits they can add to any well-balanced portfolio including dividends and rock solid stability,” an ETF Database analysis posited. “Companies within this segment are often considered some of the safest companies in the world and tend to be in more stable industries as well, potentially skewing some portfolios that are heavy in value securities.”
Overall, IWD gives investors:
- Exposure to U.S. companies that are thought to be undervalued by the market relative to comparable companies
- Targeted access to a specific category of domestic stocks
- Use to tilt your portfolio towards value stocks
Value Investing on the Comeback Trail
Under the hood of IWD, investors will recognize big names, but they won’t see tech giants like Amazon or Apple. Instead, they’ll see stable companies like Berkshire Hathaway and Johnson & Johnson, which can help provide stable returns over time.
“Value investing strategies typically involve buying stocks of companies that are trading below their estimated intrinsic value because of unfavorable developments that are likely to be temporary,” the Guru Focus article said. “It is an attractive investment strategy for long-term-oriented investors who prefer to buy stocks at a discount and hold them until the stock price converges with the target price, and this investing technique is followed by some of the most successful investors, including Warren Buffett.”
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