
Value stocks delivered solid performances in the back half of 2024. That could prompt advisors and investors to revisit the value factor and related ETFs.
Take the case of the WisdomTree U.S. Value Fund (WTV ). Over the past year, WTV returned 29.42%. That more than doubles the performance of the S&P 500 Value Index over that span. Its recent bullishness could be a sign of leadership should value stocks earnestly return to the limelight.
After a lengthy spell of leadership by large- and mega-cap growth stocks, many equity gauges believed to be diverse at the factor level now tilt more toward growth — away from value.
“One consequence of recent market dynamics favoring growth and tech stocks has been the diminishing representation of value within U.S. large-cap indexes. Growth stocks made up 37% of the S&P 500 Index as of Nov. 30 compared to a historical average of 24%,” according to BlackRock.
WTV Could Be 2025 Winner
WTV isn’t the standard value ETF. Rather than solely focusing on stocks that appear cheap on valuation, WTV’s emphasizes buybacks, dividends, and debt reduction. Those are attractive, all-weather traits, but they don’t imply that the fund lacks for value credentials. The ETF allocates about 40% of its weight to the financial services and industrial sectors — both considered value plays.
WTV’s value bias is pertinent today. That’s because value stocks have deep discounts relative to large-cap counterparts on a historical basis. Some market observers believe that gap will narrow this year. That could potentially signal opportunity with ETFs such as WTV.
“By their very nature, value stocks are priced below growth [counterparts. But] the degree of discount has varied across time. Our analysis of growth versus value stocks in the S&P 500 Index finds that valuations would have to rise more than 40% to return value stocks to long-term median levels,” added BlackRock.
Methodology Breathes New Life Into Value Investing
Add to that, WTV’s quantitative methodology breathes new life into value investing at a time when that refresh could reward patient investors who want credible value exposure.
“Our analysis finds that even commonly used value benchmarks are leaning more toward core and growth than they have historically. For these reasons, investors looking to complement or offset growth allocations and restore portfolio balance may be best served by exploring an actively managed large-cap value strategy with a well-honed research and investment process and a record of style consistency through changing market cycles,” concluded BlackRock.
For more news, information, and analysis, visit the Modern Alpha Channel.
This article was prepared as part of WisdomTree’s general paid sponsorship of VettaFi | ETF Trends. This specific content within and any opinions expressed therein belong solely to VettaFi and do not reflect the opinion or analysis of WisdomTree, its employees, or its affiliates. Content published on VettaFi | ETF Trends is provided for educational purposes only and should not be considered investment or tax advice. For investment or tax advice, please consult a financial professional.
WisdomTree is an independent company, unaffiliated with VettaFi | ETF Trends. WisdomTree has not been involved with the preparation of the content supplied by VettaFi | ETF Trends. It does not guarantee, or assume any responsibility for its content.