With economies around the world looking to reopen its doors to the general populace again, the prevailing thought is that growth can resume its upward trajectory. That said, while value may still portray a contrarian move, the tide could be turning.
According to a MarketWatch report, value stocks “remain a large contrarian bet. Many professional buy-side investors still covet the high growth potential of companies like Facebook (FB), Apple (AAPL), Amazon (AMZN), Google owner Alphabet (GOOGL) and Netflix (NFLX) compared to beaten-down bargains. In fact, a survey of global fund managers released this week by Bank of America found that the highest percentage of investors expect growth stocks to outperform value since December 2007.”
Things could be tilting towards value though as data is beginning to suggest more investors are playing the safety card following the pandemic. Value sectors like financials are seeing more investor interest
“Hopes that the global economy is now on the foothills of the post-pandemic recovery saw sector-oriented investors cast a wider net going into June,” said Cameron Brandt, director of research at EPFR, in a report.
Value-Tilted ETF Plays
For ETF investors looking for value plays, one ETF play that’s worth a look involves sifting through the Nasdaq to find value via the Principal Contrarian Value Index ETF (PVAL). PVAL seeks to provide investment results that closely correspond, before expenses, to the performance of the Nasdaq U.S. Contrarian Value Index (the “index”).
Under normal circumstances, the fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in equity securities of companies that compose the index at the time of purchase. The index uses a quantitative model designed to identify equity securities in the Nasdaq US Large Mid Cap Index (the “parent index”) that appear to be undervalued by the market relative to their fundamental value.
Another option to consider is the American Century STOXX U.S. Quality Value ETF (VALQ). VALQ seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the iSTOXX® American Century USA Quality Value Index (the underlying index). Under normal market conditions, the fund invests at least 80% of its assets in the component securities of the underlying index. The underlying index is designed to select securities of large- and mid-capitalization companies that are undervalued or have a sustainable income.
One more value-titled fund to consider is the Invesco Dynamic Large Cap Value ETF (PWV ). PWV seeks to track the investment results (before fees and expenses) of the Dynamic Large Cap Value IntellidexSM Index. The fund generally will invest at least 90% of its total assets in the securities that comprise the underlying intellidex. The underlying intellidex is composed of large-capitalization U.S. value stocks that the Intellidex Provider includes principally on the basis of their capital appreciation potential.