ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Themes
      • Active ETF
      • Artificial Intelligence
      • Beyond Basic Beta
      • China Insights
      • Climate Insights
      • Core Strategies
      • Crypto
      • Direct Indexing
      • Disruptive Technology
      • Energy Infrastructure
      • ETF Building Blocks
      • ETF Investing
      • ETF Education
      • ETF Strategist
      • Financial Literacy
      • Fixed Income
      • Free Cash Flow
      • Innovative ETFs
      • Institutional Income Strategies
      • Leveraged & Inverse
      • Managed Futures
      • Market Insights
      • Modern Alpha
      • Multifactor
      • Responsible Investing
      • Retirement Income
      • Tax Efficient Income
    • Asset Class
      • Equity
        • U.S. Equity
        • Int'l Developed
        • Emerging Market Equities
      • Alternatives
        • Commodities
        • Gold/Silver/Critical Minerals
        • Currency
        • Volatility
      • Fixed Income
        • Investment Grade Corporates
        • US Treasuries & TIPS
        • High Yield Corporates
        • Int'l Fixed Income
    • ETF Ecosystem
    • ETFs in Canada
  • 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
  • Research
    • 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 of the Week Podcast
    • ETF Prime Podcast
    • Video
  • Company
    • About VettaFi
    • Get VettaFi’ed
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. ETF Education Channel
  2. Value Stocks on the Brink of Another Moment
ETF Education Channel
Share

Value Stocks on the Brink of Another Moment

Tom LydonSep 27, 2021
2021-09-27

Value stocks set scintillating paces in the first half of 2021. Then, some of the air came out of the value trade as 10-year Treasury yields retreated, supporting an uptick by growth stocks.

For all the talk of value names pulling back, some investors might feel as though the group is back to its laggard ways. In reality, the Invesco S&P 500 Pure Value ETF (RPV B+) resides just 7.39% below its 52-week high and is still higher by almost 26% year-to-date.

Invesco SP 500 Pure Value ETF

While RPV is trading mostly sideways over the past several months, it could be ready to rally anew, and it could have some favorable history on its side.

“History says value stocks should resume beating growth stocks from here. In the first two years of a recovery from a recession, value stocks tend to outpace growth by about 24 percentage points, according to data from Research Affiliates,” reports Jacob Sonenshine for Barron’s.

One of the primary engines of the value resurgence is the U.S. economy emerging from the effects of the coronavirus pandemic, also known as the reopening trade. Value assets, including RPV, are historically linked to economic recoveries due to deep cyclical ties. For its part, RPV allocates about 55% of its combined weight to financial services, energy, and industrial stocks — sectors that historically perform during economic recoveries.

Historical trends are nice and can be potent, but they don’t always hold true to form. Fortunately, RPV has some other tailwinds. Notably, value stocks remain inexpensive relative to growth fare.

“Value names are currently priced cheaply when compared with growth stocks. The average price-to-book ratio for the value fund is currently 28% of that for the average stock in the growth fund, according to FactSet data. Since 2011, value stocks have rarely traded much below that level and at times have hit above 50% of price-to-book ratios for growth names,” reports Barron’s.

Adding to the case for RPV is the fact that market observers, as Barron’s notes, are forecasting the same earnings growth in 2022 (9%) for growth and value stocks. Why pay up for growth when the same earnings growth is available on value? That’s a question that many investors are likely to ponder in the months ahead and that could lead them to consider RPV. And if 10-year Treasury yields climb as some market participants believe will happen, the stage could be set for RPV upside.

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


Content continues below advertisement

Loading Articles...
Our Sites
  • VettaFi
  • Advisor Perspectives
  • ETF Trends
Tools
  • ETF Screener
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Database Pro
More Tools
  • Financial Advisor & RIA Center
Explore ETFs
  • ETF News
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Information
  • Contact Us
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.

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