“High-flying technology names like Facebook, Amazon and Netflix have posted earnings that do not necessarily match their valuation, Bapis said, and their shares have been purchased more so on the prospect of future growth,” according to CNBC.
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.
“The equities themselves will likely continue performing, he said, though the growth will become difficult to sustain. Bapis said he would begin rotating out of those names, at least a portion of an investor’s original investment,” reports CNBC.
While cap-weighted ETFs are popular ways of playing this theme, there are some compelling smart beta avenues for accessing ex-US developed markets.
That includes the Deutsche X-trackers FTSE Developed ex US Comprehensive Factor ETF (NYSEArca: DEEF). DEEF can be used as a complement or alternative to traditional MSCI EAFE strategies. In either case, the Deutsche ETF is rewarding investors this year. After recently making a series of new highs, DEEF is higher by about 23% year-to-date, outpacing the MSCI EAFE Index by more than 250 basis points since the start of 2017.
For more on smart beta ETFs, visit our Smart Beta Channel.