The Dow Jones Industrial Average has been on fire lately, outperforming the other major indices. The blue-chip index gained in 11 consecutive sessions, representing the longest winning streak in six years.
Amid the rally, value stocks have made an impressive comeback, with investors looking for bargains. Investors chose to take profits from growth stocks, after their astounding surge in the first half, and diversify their portfolios by investing in undervalued value stocks. Additionally, the solid corporate earnings from companies like Johnson & Johnson (JNJ), Travelers (TRV), UnitedHealth (UNH), Morgan Stanley (MS) and Bank of America (BAC) have instilled confidence in the value stocks.
Further, the Fed is widely expected to raise interest rates by 25 bps to their highest level since 2001 in the latest meeting (to be concluded on Jul 26). Value stocks tend to perform better in a rising interest rate environment because they are typically less volatile and have more predictable cash flows.
The performance of value stocks is often tied to the broader economy. Improving economic indicators, such as strong job numbers, rising consumer spending and robust manufacturing activity point to a resilient economy.
Moreover, value investing took the edge off the disappointing results of investor favorites — Tesla (TSLA) and Netflix (NFLX). Tesla slid after its profits shrunk in the second quarter while Netflix registered its biggest decline of the year after a disappointing revenue forecast.
If these weren’t enough, various concerning events have emerged lately, casting a shadow over the global economic landscape. Reports of an escalating conflict in Ukraine, a noticeable deceleration in China’s economic growth, and major U.S. banks grappling with substantial real estate losses have all resulted in the prevailing sense of unease. This has raised the appeal for value investing.
Value investing involves buying stocks or other financial assets that are believed to be undervalued or trading below their intrinsic worth. Value stocks seek to capitalize on the inefficiencies in the market and have the potential to deliver higher returns with lower volatility compared with their growth and blend counterparts. Value stocks are less susceptible to trending markets and their dividend payouts offer safety in times of market turbulence.
With value investing shining lately, most of the ETFs are hitting new 52-week highs. Investors should note that these ETFs have a solid Zacks ETF Rank #1 (Strong Buy) or 2 (Buy), suggesting their continued outperformance. Below we have mentioned the ETFs:
iShares Russell 1000 Value ETF IWD: Up 8.6% YTD
Vanguard Value ETF VTV: Up 6.2% YTD
iShares S&P 500 Value ETF IVE: Up 15.4% YTD
SPDR Portfolio S&P 500 Value ETF SPYV: Up 15.5% YTD
Vanguard Russell 1000 Value ETF VONV: Up 8.5% YTD
Vanguard S&P 500 Value ETF (VOOV) : Up 15.5% YTD
Vanguard Mega Cap Value ETF MGV: Up 5.8% YTD
iShares Russell Top 200 Value ETF IWX: Up 8.1% YTD
iShares Morningstar Value ETF ILCV: Up 9.8% YTD
Vanguard Value ETF (VTV): ETF Research Reports
Vanguard Russell 1000 Value ETF (VONV): ETF Research Reports
iShares Russell 1000 Value ETF (IWD): ETF Research Reports
iShares S&P 500 Value ETF (IVE): ETF Research Reports
SPDR Portfolio S&P 500 Value ETF (SPYV): ETF Research Reports
Vanguard S&P 500 Value ETF (VOOV): ETF Research Reports
Vanguard Mega Cap Value ETF (MGV): ETF Research Reports
iShares Russell Top 200 Value ETF (IWX): ETF Research Reports
iShares Morningstar Value ETF (ILCV): ETF Research Reports
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