These 5 Undervalued ETFs Could Be Bargains Right Now

By Trey Thoelcke Published Feb 26, 7:55AM EST

Quick Read

Vanguard Value ETF (VTV) charges 0.04% annually and holds $227.4B in assets. VTV returned 19.33% over the past year.
Alerian MLP ETF yields 8.1% with 61 consecutive quarterly distributions backed by fee-based midstream pipeline cash flows.
Vanguard Small-Cap ETF (VB) provides exposure at 0.03% expense ratio across over 1,000 holdings.

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These 5 Undervalued ETFs Could Be Bargains Right Now — © bigjom jom / Shutterstock.com

Not every exchange-traded fund (ETF) worth owning trades at a premium. Some of the most structurally sound funds sit quietly below the radar, offering low costs, reliable income, or sector exposure that the broader market has yet to reprice fully. The five ETFs below—spanning small-cap equities, energy infrastructure, pharmaceuticals, banking, and large-cap value—are ranked by the strength of their bargain case.

5. XPH: Pharmaceutical Sector Exposure at a Modest Cost

The SPDR S&P Pharmaceuticals ETF (NYSEARCA: XPH) offers broad pharmaceutical exposure at a 0.35% expense ratio, with holdings spread nearly equally across large-cap names like Eli Lilly, Merck, and Bristol-Myers Squibb alongside smaller biotech and specialty pharma firms. The top holding carries just a 2.3% weight, keeping concentration risk low.

The fund returned 31.4% over the past year and is up 3.8% year-to-date. Reddit sentiment is modestly bullish with a score of 78. Its five-year return of just 6.0% suggests the recent surge may reflect a catch-up trade rather than overextension, leaving room if pharma fundamentals hold.

4. KBE: Banking Exposure With a Yield Curve Tailwind

The SPDR S&P Bank ETF (NYSEARCA: KBE) holds over 100 bank stocks and trades at $63.79, up 13.3% over the past year, with a 2.4% dividend yield and 0.35% expense ratio.

The macro setup is constructive. The 10-year Treasury yield sits at 4.04% while the 10Y-2Y spread is a positive 0.60%, in the 75.9th percentile of the past 12 months. A positively sloped curve allows banks to borrow short and lend long, directly supporting net interest margins. The federal funds rate has held at 3.75% since December 2025, providing stability for bank earnings forecasts. Credit quality concerns surfaced in October 2025 regarding regional loan books, but the current yield curve suggests that well-diversified bank exposure remains attractive.

3. VB: Small-Cap Breadth at Near-Zero Cost

The Vanguard Small-Cap ETF (NYSEARCA: VB | VB Price Prediction) is one of the most cost-efficient ways to access the small-cap universe. Its 0.03% expense ratio, 13% portfolio turnover, and $169.1 billion in assets make it a tax-efficient core holding with no liquidity concerns.

This fund is up 7.8% year-to-date and 16.8% over the past year, currently priced at $278.09. Industrials lead sector allocation at 23.1%, followed by technology at 17.3% and financials at 13.1%. A 1.36% dividend yield adds income. Small-caps historically trade at a discount during macro uncertainty, and VB’s 1,000+ stock base reduces single-name risk.

2. AMLP: High-Yield Energy Infrastructure With Structural Tailwinds

The Alerian MLP ETF (NYSEARCA: AMLP) is built for income. The fund paid a $1.01 per share quarterly distribution with a payable date of February 17, 2026, carries a 30-day SEC yield of 8.1%, and has made 61 consecutive quarterly distributions.

Its 14 midstream energy positions include Plains All American, Energy Transfer, and Enterprise Products Partners. The fee-based business model insulates distributions from commodity price swings. WTI crude at $66.36 per barrel supports infrastructure economics, and growing natural gas demand from data center construction adds a longer-term catalyst. AMLP is up 8.8% year-to-date and 72.0% over five years. The 0.85% expense ratio is the highest in this group, but the yield profile more than compensates for income-focused investors.

1. VTV: The Lowest-Cost Path to Large-Cap Value

The Vanguard Value ETF (NYSEARCA: VTV) earns the top spot on cost, scale, income, and performance. At just 0.03% in annual expenses, it is among the cheapest equity ETFs available. The fund manages $227.4 billion in assets with a 9% portfolio turnover rate, making it exceptionally tax-efficient.

This fund yields 1.9% and holds concentrated positions in JPMorgan Chase, Berkshire Hathaway, Exxon Mobil, and Johnson & Johnson. It is up 8.2% year-to-date and 16.8% over the past year, with a five-year return of 64.5%. Financials at 22% and industrials at 7% are the largest sector weights, blending cyclical and defensive exposure.

The Bargain Case Holds Across All Five

From VTV’s near-zero cost access to large-cap value, to AMLP’s 8%+ distribution yield backed by fee-based pipeline cash flows, to VB’s broad small-cap diversification at five basis points, each fund presents a distinct combination of low costs, diversified exposure, and income characteristics that analysts and investors may find worth examining.

About the Author Trey Thoelcke →

Trey has been an editor and author at 24/7 Wall St. for more than a decade, where he has published thousands of articles analyzing corporate earnings, dividend stocks, short interest, insider buying, private equity, and market trends. His comprehensive coverage spans the full spectrum of financial markets, from blue-chip stalwarts to emerging growth companies.

Beyond 24/7 Wall St., Trey has created and edited financial content for Benzinga and AOL's BloggingStocks, contributing additional hundreds of articles to the investment community. He previously oversaw the 24/7 Climate Insights site, managing editorial operations and content strategy, and currently oversees and creates content for My Investing News.

Trey's editorial expertise extends across multiple publishing environments. He served as production editor at Dearborn Financial Publishing and development editor at Kaplan, where he helped shape financial education materials. Earlier in his career, he worked as a writer-producer at SVE. His freelance editing portfolio includes work for prestigious clients such as Sage Publications, Rand McNally, the Institute for Supply Management, the American Library Association, Eggplant Literary Productions, and Spiegel.

Outside of financial journalism, Trey writes fiction and has been an active member of the writing community for years, overseeing a long-running critique group and moderating workshop sessions at regional conventions. He lives with his family in an old house in the Midwest.