For most of this current bull market, growth stocks have outperformed value fare, but some market observers believe that scenario could be poised to change. A new exchange traded fund offers investors leverage to a value rebound with the added benefit of the quality factor.

The Xtrackers Russell 1000 US QARP ETF (NYSEArca: QARP) debuted earlier this month. The smart beta ETF tries to identify companies that have strong quality scores relative to their peers while also looking at the value scores of the securities to avoid companies that are potentially over-priced. The quality focus also seeks to avoid so-called value traps, or companies with favorable valuation metrics as they approach bankruptcy, that a pure value exposure would likely fall into.

“’Value’ stocks typically boast low price-earnings ratios and other traditional assessment metrics, often looked upon as undervalued relative to its underlying fundamentals. ‘Growth’ stocks are often considered those whose earnings are expected to increase at an above-average rate but don’t necessarily boast the same strong fundamental backdrop,” according to CNBC.

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Investigating QARP’s Value Opportunity

QARP’s value factor is based on a company’s valuation ratios and identifies stocks that have low prices relative to their fundamental value and that provide the possibility of excess returns.

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.

“Three sectors that appear particularly attractive here are financials, health care and energy. Energy was once a major laggard but has made a comeback in the last months,” said Chad Morganlander, portfolio manager with Washington Crossing Advisors, in an interview with CNBC.

QARP allocates about 23% of its combined weight to those sectors.

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