Value stocks almost always seem just on the cusp of a bright moment, but could “this” time actually be for real for the category? Where past value calls have stemmed from smaller trends in equities data, like disappointing growth returns, more macro factors are looming that could produce value-friendly conditions: namely, persistent inflation. Those conditions could make active value ETFs a particularly intriguing option for the second half this year.
See more: Are Markets Wrong About Inflation? Active Bond ETFs Can Help
T. Rowe Price’s 2025 Midyear Market Outlook recently explored the shifting equities landscape, including inflation data. According to T. Rowe Price global equity head Josh Nelson and portfolio manager Scott Berg, market leadership is broadening and more sectors are becoming relevant by a combination of tax cuts and tariffs.
“An expanding opportunity set in stock markets was on its way before Donald Trump was elected U.S. president; the trade policies he has implemented since taking up office have merely sped up the process,” they wrote. “We are returning to an environment in which more sectors and regions can work—one demanding diversification and favoring active management.”
“As U.S. inflation remains higher for longer, value stocks—which historically have outperformed growth stocks in inflationary environments—are expected to become more competitive again,” they added. “Value sectors such as energy, materials, and industrials historically have performed well during inflationary periods.”
Value ETFs in an Inflationary Environment
June’s CPI print showed that inflation hasn’t gone away. Tariffs will contribute to that further for consumers and supply chains. A.I. spending, even, may drive demand for key commodities in data center construction and tech chains that could also contribute.
Active value ETFs combine the benefits of the ETF wrapper with the strengths of active management. Active management can provide the fundamental research-driven scrutiny needed to parse increasingly relevant value sectors. The ETF wrapper, meanwhile, can help make portfolios more tax efficient with the convenience of intraday trading.
The T. Rowe Price Value ETF (TVAL ) offers one notable option among value ETFs. TVAL charges a 33 basis point (bps) fee to actively invest in large cap U.S. stocks with a bottom-up stock selection approach. That fund leans on T. Rowe Price’s fundamental research capabilities, looking at metrics and attributes like restructuring opportunities, undervalued assets, and dividend yield.
Together that has helped the active value ETF return 7.15% over one year. For those looking to diversify and refresh portfolios, TVAL may appeal.
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