The ground is shifting under the earth of ETF factors and it involves a move into more value-focused funds as opposed to growth-related funds. One ETF that’s worth a look under the hood is the iShares MSCI EAFE Value ETF (BATS: EFV).
While the extended bull run has given investors a wave of gains, the focus has returned to value and as such, the risk-off strategies are back in vogue. While this typically involves a move back to bonds, more defensive maneuvers into ETFs like EFV are also an option.
EFV seeks to track the investment results of the MSCI EAFE Value Index composed of developed market equities, excluding the U.S. and Canada, that exhibit value characteristics. As far as strategy goes, 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.
Furthermore, the underlying index is a subset of the MSCI EAFE Index. Constituents of the underlying index include securities from Europe, Australasia, and the Far East.
With a net expense ratio of 0.38%, the fund gives investors a cost-effective means of getting exposure to value-oriented equities.
What About International Stocks
Per the iShares website, here’s what the fund offers:
- Exposure to a broad range of companies in Europe, Australia, Asia, and the Far East that are thought to be undervalued by the market
- Targeted access to a specific category of EAFE stocks
- Use to tilt an international stock allocation towards value stocks
So not only do investors get exposure to value, but they also derive it through a diversified investment into other countries outside of the U.S. Other parts of the globe could be in different phases of their economic cycle, which allows investors to capture any gains in economies that are still in a growth phase. If investors are still hesitant to get into more riskier assets like emerging markets, EFV still offers them international exposure.
Here’s a look at the top 10 holdings in the fund and their weightings as of Sept. 20:
- TOYOTA MOTOR CORP: 2.32%
- HSBC HOLDINGS PLC: 2.32%
- BP PLCEnergy: 1.96%
- ROYAL DUTCH SHELL PLC: 1.91%
- TOTAL SA: 1.90%
- ROYAL DUTCH SHELL PLC CLASS B: 1.64%
- GLAXOSMITHKLINE PLC: 1.54%
- SANOFI SA: 1.51%
- BRITISH AMERICAN TOBACCO PLC: 1.27%
- BHP GROUP LTD: 1.13%
As you can see, the fund holds a diverse mixture of sectors, ranging from health care, energy, financials, materials, consumer discretionary, and more.
Since its inception date back in 2005, EFV has been a tried-and-tested performer, delivering a 5.32% return within the last 10 years and 3.27% since it began. According to Yahoo Finance, the fund has returned 8.77% YTD.
For more market trends, visit ETF Trends.