When it comes to the stock market, one of the most straightforward ways to categorize the various types of assets available is to put them into two categories: growth and value. For growth stocks, revenue growth and client acquisition are the primary concerns, which may necessitate foregoing actual gains to invest in the long term. However, when it comes to value stocks, even if they’re mature or stagnating enterprises that may never become much larger, they tend to be more reliable and stable. Investors focus on growth as they chase dynamic tech businesses, but value investing is essential to any portfolio since these stocks are based on solid foundations. Here are five ETFs worth a closer look if you want to skew your assets toward value right now.
Invesco S&P 500 Pure Value ETF
For a somewhat more selective fund, Invesco has selected 120 stocks from the S&P 500 Pure Value Index. It ranks them based on three fundamental value investing factors: earnings-to-price ratio, book value-to-price ratio, and sales–price ratio. In addition, it uses an “equal weight” technique to ensure that no single stock takes up more than its fair share of the portfolio.
Vanguard Value ETF
If you want broad exposure to value companies, this Vanguard ETF is an excellent place to start. It has over $80 billion assets worth, an impressive four-star rating from Morningstar, and an extremely low expense ratio of just 0.04%. Value investing in mature and low-risk firms is shown by this fund’s more than 300 holdings, including JPMorgan Chase & Co. and Johnson & Johnson, which are among its top holdings.
Mega Cap Value ETF from the Vanguard Group (MGV)
Approximately 140 stocks make up the portfolio, and the group as a whole has a market capitalization of over $150 billion on average. In the case of MGV, you’re essentially sticking to the same old suspects that you may already have a lot of exposure to through other funds – like Warren Buffett’s Berkshire Hathaway – but this may be a positive thing for some value investors seeking consistency above all else.
SPDR S&P 600 Small Cap Value ETF
SLYV invests in firms with market capitalizations ranging from around $200 m to $10 billion, and it seeks to keep investors placed in off-the-beaten-path, value-oriented investments. However, smaller enterprises lack the financial resources of large banks or industrial conglomerates; therefore, this has its downsides. On the other hand, the screening approach assures that these are not revenue-losing software companies, with a strong 25% of their portfolio now invested in smaller financial enterprises and 17% in industrials, representing the top two sectors.
Financial Select Sector SPDR Fund (XLF)
There are around 70 equities to choose from in this value-oriented sector, including huge banks like Citigroup and investing firms like Charles Schwab Corp. and insurance company Chubb. There is an obvious risk in putting all of your eggs in one basket in a single sector, but when finances are often over-represented in general value funds, why not go directly to the source?