Among high-growth internet, technology and biotech names, exchange traded funds that track the value style also rank among the best performing strategies over the past nine-year period, the second-longest bull market in U.S. history.
The growth factor trumped the value factor for about a decade. Some would argue even longer. However, the value factor has exhibited surprising strength.
Among the top 15 best performing ETFs since March 10, 2009, the Guggenheim S&P 500 Pure Value ETF (NYSEArca: RPV) generated an average annualized return of 27.5%, Guggenheim S&P Smallcap 600 Pure Value ETF (NYSEArca: RZV) averaged 25.5% and Guggenheim S&P MidCap 400 Pure Value ETF (NYSEArca: RFV) averaged 25.0%.
Many would automatically point to growth names, like technology or biotechnology, in a bullish market environment as investors chase after quickly expanding segments of the markets. Value, on the other hand, is not a obvious play.
2018 ETF Trends Virtual Summit returns Wednesday, March 14! Earn 5 CE Credit – click to register!
Value stocks typically trade at cheaper prices relative to fundamental measures of value, such as earnings and the book value of assets. In contrast, growth stocks tend to run at higher valuations since investors expect the rapid growth in those company measures. The value style, though, has came into focus after a bout of heightened market volatility and lingering global uncertainty pushed investors to reconsider riskier high-growth stocks.
RPV focuses on S&P 500 companies that exhibit the value trait, with a heavy 28.8% emphasis on financials, consumer discretionary 20.5% and 10.6% energy. The large tilt toward financials could prove beneficial in a rising rate environment.
RZV targets companies that exhibit the value characteristic but focuses on the smaller companies taken from the S&P SmallCap 600 benchmark. The fund is heavy on consumer discretionary 33.1%, industrials 17.1% and information technology 12.0%.
2018 ETF Trends Virtual Summit returns Wednesday, March 14! Earn 5 CE Credit – click to register!
Lastly, RFV includes value stocks taken from the S&P MidCap 400 Index. The portfolio includes 19.1% consumer discretionary, 15.4% financials and 13.9% information technology.
For more information on the equities markets, visit our current affairs category.