Value Outshines Growth: 5 ETF Winners

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With increased optimism on swift economic recovery backed by the wider rollout of COVID-19 vaccines and more stimulus, value stocks have been outperforming the growth ones.

This is especially true as iShares Russell 1000 Value ETF (IWD - Free Report), which targets the value segment, has risen 5.4% over the one-month period compared with a loss of 2.4% for its growth counterpart iShares Russell 1000 Growth ETF (IWF - Free Report). According to the Sam Hendel, Levin Easterly Partners, as told in Yahoo Finance, this month has actually seen the largest outperformance of value versus growth in the last 20 years.

Value Edge Over Growth

Surging Treasury yields and the resultant inflationary pressure have been weighing on investors’ sentiment lately and compelled investors to rotate out of the high-growth areas into the low-valued stocks. Investors should note that the value stocks were badly beaten down by the coronavirus pandemic and are thus attractively valued at the current levels.

With continued progress in more vaccines, rapid vaccination rollout, and the prospect of further U.S. stimulus, the economy is on the mend with swift recovery expectation. The combination of factors will result in increased industrial activity and pickup in consumer demand, thereby lifting value stocks. Improvement in corporate earnings growth also bodes well for these stocks.

Further, value stocks seek to capitalize on the inefficiencies in the market and have the potential to deliver higher returns with lower volatility compared with the growth and blend counterparts. Additionally, value stocks are less susceptible to trending markets and their dividend payouts offer safety in times of market turbulence.

Given this, investors seeking to tap the current trends could consider the value ETFs. We have presented a bunch of those that are at the forefront of the current stock rotation and are not confined to a particular sector or industry. These funds are expected to continue performing well in the coming weeks.

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Disclosure: Zacks.com contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any ...

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