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Over the past month, value stocks and value ETFs have outperformed their growth counterparts, as investors seek out more reliable and less volatile investments.With valuations remaining high, and the potential for a slowing economy, some experts believe value stocks could continue to outperform in the near term.Investors looking to diversify their portfolios while taking advantage of this trend may want to consider value ETFs, or exchange-traded funds that invest in value stocks. Here are three top-value ETFs to consider.
Vanguard Value ETF
The Vanguard Value ETF (NYSEARCA: VTV) has been one of the best-performing value ETFs this year and over the past five years. This passively managed fund tracks the CRSP US Large Cap Value Index, which includes 342 of the largest value stocks in the country, screened by price-to-book, forward price-to-earnings, historical price-to-earnings, price-to-sales, and price-to-dividend ratios.The ETF has a median market cap of $132 billion and the three largest holdings are currently Broadcom (Nasdaq: AVGO), Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B), and JPMorgan Chase (NYSE: JPM). Roughly 20% of the ETF is in financials, with 16% in health care, and 15% in industrials, followed by technology at 11%.The ETF is among the top value ETF performers this year, as it has returned about 13.8% YTD and 17.3% over the past 12 months, through the end of July. It has a five-year annualized return of 11.4% and a 10-year annualized return of 10.5%.
Invesco Large Cap Value ETF
The Invesco Large Cap Value ETF (NYSEARCA: PWV) is another large cap value ETF, but it is much different from the Vanguard Value ETF. It tracks the Dynamic Large Cap Value Intellidex Index, which only includes about 50 large cap value stocks with strong value characteristics based on roughly 10 different value factors it screens for. It also has limits in place so that no single stock or sector has too much weight in the portfolio.The three largest holdings right now in this ETF are AbbVie (NYSE: ABBV), IBM (NYSE: IBM), and Johnson and Johnson (NYSE: JNJ). Financials make up 27% of the portfolio, followed by healthcare at 21% and energy at 16%.The ETF has returned 15.3% YTD and 21.3% over the past 12 months, as of July 31. Those returns easily beat the Russell 1000 Value Index. It has a five-year annualized return of 12.4% and a 10-year annualized return of 9.8%.
JPMorgan US Value Factor ETF
The JPMorgan US Value Factor ETF (NYSEARCA: JVAL) is a bit of a hybrid in that it tracks the JP Morgan US Value Factor Index, so it’s passive in one sense. However, the index is proprietary and managed and developed by JPMorgan, so they have control over what’s in it.It is also different from the others in that it is more broadly diversified, drawing from constituents of the Russell 1000, so it includes both large and mid-cap value stocks. The rules-based proprietary selection process uses a relative valuation factor to identify companies with attractive valuations.Currently, there are about 374 holdings in the ETF. The three largest holdings are Meta Platforms (Nasdaq: META), Apple (Nasdaq: AAPL), and UnitedHealth Group (NYSE: UNH). About 35% of the fund is in technology stocks while 14% is in consumer discretionary stocks. Further, it has roughly 12% each in healthcare and industrials.The ETF has been among the best long-term performers in its class, with a five-year return of 12.4%. It does not have a 10-year track record yet, as it was launched in 2017. It has returned 11.4% YTD and 16.8% over the past one-year period ended July 31.All three of these value ETFs are among the best in their class, not only over the past year, but also over the long term as well. Any one of them would be a solid addition to a diversified portfolio, especially now, with value stocks potentially coming into favor.More By This Author:These 3 Stocks Just Raised Their DividendsThe Top 4 Value Stocks To Buy Now Amid Correction Starbucks Stock Soars Amid Starboard Value Stake – But Did Investors Celebrate Too Early?
