“But the herding into value funds could be more of a gut reaction based on historical assumptions than a careful evaluation of which sectors to focus on. For example, financial stocks make up the largest allocation in IWD at 27 percent, meaning the fund may not be as defensive as expected considering the recent turmoil surrounding banks,” according to Bloomberg.
IWD entered Tuesday with a year-to-date decline of 6.65%. The ETF has a three-year standard deviation of 9.22%.
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 since investors expect the rapid growth in those company measures, but more are growing wary of high valuations.
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