3 value ETFs to stabilize your portfolio
The recent sell-off of tech and cryptocurrencies raises concerns about market volatility, with an emphasis on value-based ETFs.
Value stocks can help mitigate volatility due to their reduced sensitivity to extreme market fluctuations. This is one of the reasons they have been preferred over growth stocks so far in 2021.
“Growth has outperformed value over the past decade – except for a brief period in 2016 where value has strongly but briefly outperformed,” said Capital.com article mentionned. “Since then, growth has rebounded strongly, driven mainly by a handful of mega-cap darlings. This has resulted in the widest valuation differentials ever recorded between growth and value. “
A trio of valuable funds
One fund to consider is the Vanguard Value ETF (VTV). With its low expense ratio of 0.04%, VTV is a relative boon.
VTV has the typical characteristics of a value fund that primarily houses large cap stocks. When markets push up, they can capture the upside while mitigating the effects of volatility whenever there is downward selling pressure.
The ETF is never too heavy on a particular stock. In fact, its large positions hedge against concentration risk while providing diversification across a range of sectors.
The next step is IShares Russell 1000 Value ETF (IWD). IWD seeks to track the investment results of the Russell 1000® Value Index, which measures the performance of large and mid-cap value sectors of the US stock market.
The fund generally invests at least 90% of its assets in securities of the underlying index and in certificates of deposit representing the securities of the underlying index. It may invest the remainder of its assets in certain futures, options and swaps, cash and cash equivalents, as well as in securities not included in the underlying index, but which the advisor believes will help the fund. to replicate the underlying index.
Finally, there is the SPDR S&P 500 Value ETF Portfolio (SPYV). The fund seeks to provide investment results which, before fees and expenses, generally correspond to the total return performance of the S&P 500 Value Index which tracks the performance of large cap US exchange-traded equity securities with characteristics valuable”.
The fund uses a sampling strategy in an attempt to track the performance of the S&P 500 Value Index. It generally invests substantially all, but at least 80%, of its total assets in the securities comprising the index, which measures the performance of the large-cap value segment of the US stock market.
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