Bet now on these top-notch ETFs
Value investing is growing in popularity in 2021. Investors appear to be optimistic about the accelerated deployment of the coronavirus vaccine, strong budget support and the reopening of the US economy, which could accelerate the economic recovery of the United States after the economic downturn caused by the pandemic. These factors create the right environment for value stocks to outperform their growth counterparts this year. Notably, the Russell 1000 Value Index is up 17.8% so far this year, while the Russell 1000 Growth Index is up 4.8%.
According to data from Johns Hopkins University, the daily average of new cases fell to about 17,248, as of May 31 (according to a CNN report). The decline in the number of coronavirus cases has increased optimism among market participants for a faster recovery and reopening of the US economy.
The United States is strongly in control of the coronavirus outbreak with an accelerated distribution of coronavirus vaccines. According to data from the Centers for Disease Control and Prevention (CDC), more than half of the American population has received at least one dose of a COVID-19 vaccine, according to a CNBC article. A CNN report also says 12 states have met President Joe Biden’s goal of vaccinating 70% of adults, with at least one dose of the coronavirus vaccine by July 4, according to the CDC.
In another encouraging development, Moderna (MRNA) has announced an impressive update on mRNA-1273. The company announced that the Phase 2/3 study of its COVID-19 vaccine (mRNA-1273) in adolescents has met its primary endpoint of immunogenicity. Notably, there was no record of coronavirus cases among the participants who received the two doses of mRNA-1273.
Ongoing, the latest public health guidelines issued by the CDC have relaxed restrictions on wearing masks during indoor and public gatherings. According to the new recommendations, people who are fully vaccinated do not need to wear masks or stay six feet from others during indoor or outdoor gatherings, according to a CNBC article.
Additionally, the latest ISM manufacturing PMI data for the United States paints a rosy picture for the sector. The ISM manufacturing PMI posted 61.2 in May against 60.7 in April. May’s growth was higher than analysts’ expectations of 60.7. In addition, manufacturing activity increased for the 12th consecutive month.
Reinforcing optimism about the economic recovery in the United States, the latest reading of the first jobless claims for the week ended May 29 is 385,000, as mentioned in a CNBC article. It compares favorably to the Dow Jones estimate of 393,000. Additionally, jobless claims fell below 400,000 for the first time since the early days of the coronavirus outbreak, according to the same CNBC article. .
It should be noted here that Keith Lerner, chief market strategist at Truist, also said that “the earnings dynamics of the tech sector relative to the broader market peaked at the end of May 2020. As we expect that the economy grows well above trend this year and then value has to benefit. Indeed, when you look at value indices, they are dominated by financials and tend to have greater exposure to economically sensitive sectors that are more conducive to an economic recovery, ”according to a CNBC article.
Top-ranked value ETFs to bet on
It should be noted here that value investing looks more lucrative given improving corporate profit growth and the expectation of higher inflation. In addition, value stocks seek to capitalize on market inefficiencies. They can generate higher returns with lower volatility compared to their growing and blending counterparts. In addition, value stocks are less exposed to market trends and their dividend payouts provide a safety shield during market turmoil.
Against this background, 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 US companies which are potentially undervalued relative to comparable companies. With assets under management of $ 23.08 billion, it charges 18 basis points (bps) in terms of expense ratio. The fund carries a Zacks Rank # 2 (Buy).
Vanguard Mega Cap Value ETF VGM
With assets under management 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).
ETF Schwab US Large Cap Value SCHV
The fund’s objective is to replicate as closely as possible, before fees and expenses, the total return of the Dow Jones US Large-Cap Value Total Stock Market index. With assets under management of $ 9.88 billion, it charges a 4 basis point expense ratio. The fund has a Zacks Rank # 1 (read: Value ETF (SCHV) hits new high in 52 weeks).
Invesco S&P 500 Enhanced Value ETF SPVU
The fund is based on the S&P 500 Enhanced Value Index. With assets under management of $ 141.8 million, it charges 13 basis points in expense ratio. The fund carries a Zacks Rank # 1 (read: 5 great value ETFs to buy as inflation fears the markets).
Vanguard S&P 500 Value ETF VOOV
With assets under management 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 S&P 500 Value ETF Portfolio SPY
The fund seeks to provide investment results which, before fees and expenses, generally correspond to the total return of the S&P 500 Value Index. With assets under management of $ 12.99 billion, it charges a 4 basis point expense ratio. The fund carries a Zacks Rank # 2.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.