An aging bull market is seeing the value factor drink from the fountain of youth lately. While investors are hopping off the growth and momentum train, the risk-off sentiment is causing them to shift back to value where opportunities are rife for funds like the Deep Value ETF (NYSEArca: DVP).
As such, there are incredible opportunities for investors to jump into equities while the default maneuver in today’s market landscape is heading into safe-haven assets like bonds or precious metals. Investors, however, could be missing out.
The shift to value in U.S. equities is readily apparent—per the U.S. News and World Report, “there has been at least a temporary shift in market leadership. After a decade of underperformance, value stocks outperformed the S&P in the first few weeks of September, while growth stocks lagged. While the debate rages on Wall Street as to whether this shift is temporary or an inflection point for value stocks, choosy investors can have the best of both worlds.”
DVP seeks to provide investment results that, before fees and expenses, correspond to the total return performance of the Deep Value Index. The Index is comprised of 20 undervalued dividend paying stocks within the S&P 500 Index with solid balance sheets, earnings and strong free cash flow. The companies within the Index are weighted based on a rules-based assessment of their valuations so that stocks that are most attractively valued receive a higher weight.
- The Deep Value Index is constructed using an objective, rules-based methodology that begins with an initial universe that mirrors the companies listed on the S&P 500 Index. The universe of companies is then narrowed to include only companies that have positive earnings and returns on invested capital, generate free cash flow, and currently pay a dividend.
- The S&P 500 Index is a broad based unmanaged index of 500 stocks, which is widely recognized as representative of the equity market in general. You cannot invest directly in an index.
- Free cash flow represents the cash that a company is able to generate after laying out the money required to maintain or expand its asset base.
Top 10 holdings as of Sept. 25:
- Franklin Res Inc: 7.66% Weighting
- Cardinal Health Inc: 7.65% Weighting
- VIACOM INC NEW: 7.36% Weighting
- MACYS INC: 6.83% Weighting
- DXC TECHNOLOGY CO: 6.65% Weighting
- LYONDELLBASELL INDUSTRIES N V SHS – A -: 4.77% Weighting
- CENTURYLINK INC: 4.57% Weighting
- HP INC:4.54% Weighting
- KOHLS CORP: 4.47% Weighting
- GILEAD SCIENCES INC: 4.44% Weighting
For the past three years, DVP has been providing a 10.73% return based on Yahoo Finance performance figures.
For more market trends, visit ETF Trends.