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By Jonathan Jones and Tom Lydon The value factor is starting to shake off several years of slack performance to outpace its growth and momentum counterparts as investors yearn for safer destinations in 2016, according to industry analyst ETF Trends . That is proving to be good news for exchange traded funds such as the $9.4 billion iShares S&P 500 Value ETF (NYSEArca: IVE ) . “It’s got a nice 2.5% dividend and when you are stuck in a trading range you want to be in value,” said Brock Moseley, president of Miracle Mile Advisors, of IVE in an interview with TheStreet.com . As the market cools off and moves toward more stable growth, exchange traded funds that track the value style may outperform. “Should economic conditions continue to stabilize, value stocks may be one of the bigger beneficiaries,” according to Russ Koesterich, Global Chief Investment Strategist and Head of the Model Portfolio & Solutions Business at BlackRock . “Value typically outperforms during periods when economic conditions are improving.” Value stocks typically trade at cheaper prices relative to fundamental measures of value, such as earnings and the book value of assets. In contrast, growth stocks tend to run at higher valuations since investors expect rapid growth in those company measures. IVE holds nearly 370 stocks, almost 24% of which are financial services names. Energy stocks account for over 12% of IVE’s weight and healthcare and industrial stocks each command allocations of more than 11%. The S&P 500 Value ETF showed a 14.62 price-to-earnings and a 1.65 price-to-book. In contrast, the S&P 500 Growth ETF has a 19.34 P/E and a 3.99 P/B while the S&P 500 Index ETF was trading at a 16.7 P/E and a 2.34 P/B. Plain vanilla index ETFs that track the value theme has outperformed so far this year, or at least have not done as poorly as broader benchmarks. Nevertheless, potential investors should still look under the hood of these value stock ETFs as no two are created alike and offer varying performances. iShares S&P 500 Value ETF Click to enlarge Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. Scalper1 News
Scalper1 News