Value investing is witnessing growing popularity in 2021. Investors seem to be optimistic about the accelerated coronavirus vaccine rollout, solid fiscal stimulus support and reopening of the U.S. economy, which may lead to faster U.S. economic recovery from the pandemic-led economic slowdown. These factors are creating a conducive environment for value stocks to outperform their growth counterparts this year. Notably, the Russell 1000 Value index has climbed 17.8% so far this year, whereas the Russell 1000 Growth index is up 4.8%.

According to data from Johns Hopkins University, the daily average of new cases declined to roughly 17,248, as of May 31 (per a CNN report). The decline in the number of coronavirus cases has increased optimism among market participants toward faster recovering and reopening of the U.S. economy.

The United States is strongly controlling the coronavirus outbreak with accelerated coronavirus vaccine distribution. According to the Centers for Disease Control and Prevention (CDC) data, more than half of the U.S. population has been administered at least one dose of a COVID-19 vaccination, per a CNBC article. A CNN report also states that 12 states have touched President Joe Biden’s target to vaccinate 70% of adults, with at least one dose of coronavirus vaccine by Jul 4, per the CDC.

In another encouraging development, Moderna (MRNA) announced an impressive update relating to mRNA-1273. The company has announced that the Phase 2/3 study of its COVID-19 vaccine (mRNA-1273) in adolescents has met its primary immunogenicity endpoint. Markedly, there was no record of coronavirus cases among participants who were administered both the mRNA-1273 doses.

Going on, the latest public health guidelines issued by the CDC have relaxed restrictions on wearing masks at indoor and public gatherings. According to the new recommendations, completely vaccinated people do not need to wear masks or stay six feet away from others at indoor or outdoor gatherings, per a CNBC article.

Also, the latest ISM Manufacturing PMI data for the United States is painting a rosy picture for the sector. The ISM Manufacturing PMI read 61.2 in May against 60.7 in April. May’s growth was higher than analysts’ expectations of 60.7. Moreover, manufacturing activity rose for the 12th straight month.

Strengthening optimism about U.S. economic recovery, the latest reading on the first-time claims for unemployment benefits for the week ended May 29 came in at 385,000, as mentioned in a CNBC article. It compared favorably with the Dow Jones estimate of 393,000. Moreover, the jobless claims slid below 400,000 for the first time since the early days of the coronavirus outbreak, per the same CNBC article.

It is worth noting here that Keith Lerner, chief market strategist at Truist, has also commented that “technology sector earnings momentum relative to the broader market peaked in late May of 2020. Given that we expect the economy to grow well above trend this year and next, value stands to benefit. Indeed, when looking at the value indices, they are dominated by financials and tend to have greater exposure to economically-sensitive sectors that are more leveraged to an economic recovery,” according to a CNBC article.

Top-Ranked Value ETFs to Bet on

It is worth noting here that value investing seems more lucrative given the improvement in corporate earnings growth and expectation of higher inflation. Moreover, value stocks seek to capitalize on market inefficiencies. They can deliver higher returns with lower volatility compared with the growth and blend counterparts. Additionally, value stocks are less exposed to trending markets and their dividend payouts offer a safety shield during market turbulence.

Against this backdrop, here are some top-ranked value ETFs that investors can consider betting on:

iShares S&P 500 Value ETF IVE

The fund provides exposure to large U.S. companies that are potentially undervalued relative to comparable companies. With AUM of $23.08 billion, it charges 18 basis points (bps) in expense ratio. The fund carries a Zacks Rank #2 (Buy).

Vanguard Mega Cap Value ETF MGV

With AUM of $4.45 billion, the fund tracks the performance of the CRSP US Mega Cap Value Index. It charges a fee of 7 bps and has a Zacks Rank #1 (Strong Buy).

Schwab U.S. Large-Cap Value ETF SCHV

The fund’s goal is to track as closely as possible, before fees and expenses, the total return of the Dow Jones U.S. Large-Cap Value Total Stock Market Index. With AUM of $9.88 billion, it charges 4 bps in expense ratio. The fund has a Zacks Rank #1 (read: Value ETF (SCHV) Hits New 52-Week High).

Invesco S&P 500 Enhanced Value ETF SPVU

The fund is based on the S&P 500 Enhanced Value Index. With AUM of $141.8 million, it charges 13 bps in expense ratio. The fund carries a Zacks Rank #1 (read: 5 Great Value ETFs to Buy as Inflation Fears Grip Markets).

Vanguard S&P 500 Value ETF VOOV

With AUM of $2.35 billion, the Zacks Rank #2 fund tracks the performance of the S&P 500 Value Index. It charges a fee of 10 bps.

SPDR Portfolio S&P 500 Value ETF SPYV

The fund seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the S&P 500 Value Index. With AUM of $12.99 billion, it charges 4 bps in expense ratio. The fund carries a Zacks Rank #2.