Unearthing Value With Small-Cap Stocks

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The industrial sector is VBR’s second-largest sector weight at 20.3%, followed by consumer services at 10.6%. VBR holds 850 stocks with a median market value of $3.7 billion, implying this is actually a smaller mid-cap fund.

“Small cap value hasn’t been much to look at over the past several years, but it’s looking increasingly attractive in an overvalued market. We’ve seen equity indices rise for 9 straight years (assuming, of course, 2017 remains positive), and, at some point, investors are going to have to prepare for a down market. Small cap value has some built-in downside protection in case there’s a correction or a full-blown bear market,” according to ETF Daily News.

Value stocks have historically outperformed growth stocks, or companies with high earnings expectations, in almost every market over the long-haul. For instance, the MSCI USA Value Index has outperformed the MSCI USA Growth Index by an annualized 81 basis points since 1974 through September 2015.

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