ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Active ETF
    • Alternatives
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Disruptive Technology
    • Dividend
    • Dual Impact
    • Emerging Markets
    • Energy Infrastructure
    • ESG
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Fixed Income
    • Free Cash Flow
    • Future ETFs
    • Global Diversification
    • Gold/Silver/Critical Minerals
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Market Insights
    • Megatrends
    • Modern Alpha
    • Multi-Asset
    • Night Effect
    • Portfolio Strategies
    • Retirement Income
    • Richard Bernstein Advisors
    • Tax Efficient Income
    • Thematic Investing
    • Volatility Resource
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
    • ETF Data for Journalists
    • ETF Nerds
  • Research
    • First Bitcoin ETF
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF Trends on Videos
    • ETF Trends on Podcasts
    • ETF Prime Podcast
  • Company
    • About Us
    • Swag Store
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. ETF Education Channel
  2. Unusual Discounts a Popular 2022 Theme
ETF Education Channel
Share

Unusual Discounts a Popular 2022 Theme

Tom LydonDec 28, 2022
2022-12-28

Among the most discussed themes amid the 2022 equity market duress was weakness in once high flying growth stocks, much of it attributable to the Federal Reserve boosting interest rates seven times this year. Prior to 2021, growth outperformed value by notable margins for about a decade. Now, value is on a two-year winning streak against growth.

Speaking of value, the emergence of it across the growth spectrum, including in exchange traded funds such as the Invesco QQQ Trust (QQQ B)+ and the Invesco NASDAQ 100 ETF (QQQM B), explains why hunting for value in unusual places was a prominent theme in 2022.

As VettaFi’s Elle Caruso reported in March, a confluence of factors forced growth stocks and ETFs down to rarely seen discounts.

“In the current market environment, marred by turbulence, inflation, and uncertainty about rising rates and geopolitical tensions, long-term investors have the opportunity to capitalize on traditionally expensive, highly-regarded funds trading at a significant discount,” wrote Caruso.

There’s something to that take, because as 2022 wore on, it became clear that some members of the QQQ and QQQM lineups were taking on value traits. The Fed played a part in that, because rising interest rates diminish the allure of growth companies’ future cash flows.

This year’s weakness in growth stocks is also allowing value to close a long-running, sizable gap. For how long that trend lasts remains to be seen, but if Treasury yields decline in 2023, ETFs such as QQQ and QQQM could generate upside.

“At the end of 2021, large-cap growth was ahead of large-cap value by more than 14 percentage points per year on a five-year trailing basis. Now, closing out 2022, large value is ahead of large growth by 0.2 percentage points per year. And the 10-year style box through Dec. 16 shows large growth 1.6 percentage points ahead of large value in terms of annualized performance over the past decade, down from nearly 7 percentage points at the end of 2021,” noted Morningstar analyst Lauren Solberg.

Potentially auguring well for QQQ and QQQM in 2023 is the point that current discounts on some of the ETFs’ marquee components, including Google parent Alphabet (NASDAQ:GOOG), Amazon (NASDAQ:AMZN) and Facebook parent Meta Platforms (NASDAQ:META), are so unusual relative to historical precedent that investors — both of the value and growth persuasions — could be compelled to nibble at these high-quality names in the new year.

For more news, information, and strategy, visit the ETF Education Channel.

Loading Articles...
Help & Info
  • Contact Us
Tools
  • ETF Screener
  • ETF Analyzer
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Performance Visualizer
  • ETF Database Model Portfolios
  • ETF Database Realtime Ratings
  • ETF Database Pro
More Tools
  • ETF Launch Center
  • Financial Advisor & RIA Center
  • ETF Database RSS Feed
Explore ETFs
  • ETF News
  • ETF Picks of the Month
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Best ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Legal
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.
Follow ETF Database
Follow ETF Database

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X