“As growth-oriented areas of the market like technology get pummeled in the wake of trade concerns and rising interest rates, more defensive and value-oriented plays have outperformed,” according to Bloomberg. “Utilities and consumer staples are the only two S&P 500 sectors in the green this month. The selloff has also brought the broad market benchmark to its cheapest level since 2016, inspiring many to go bargain hunting.”
The $35.16 billion IWD holds 725 stocks, nearly 14% of which are consumer staples and utilities names. The allocates almost 38% of its combined weight to the financial services and healthcare sectors.
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.
For more on smart beta ETFs, visit our Smart Beta Channel.