Displaying items by tag: value

Value stocks are making a strong comeback in early 2025, with major names like JPMorgan Chase, IBM, and Ford surpassing earnings expectations. The Vanguard Value ETF, which has lagged behind the S&P 500 in recent years, is now up 4.8% year-to-date, outpacing the broader market’s 3.5% gain. 

A key driver has been robust earnings, as 72% of value companies have exceeded forecasts, well above the long-term median of 63%. Large banks have been standout performers, benefiting from improved investment banking revenue and lower interest rates compared to last year. 

IBM has also surged, riding the AI wave and streamlining operations, while Ford remains a deep-value play despite short-term headwinds. With a forward P/E of just 6.4 and a high dividend yield, Ford could reward investors willing to weather its challenges.

Finsum: Factor investing is very cyclical, and with interest rate uncertainty it might be time to consider value as a critical factor when making portfolio changes. 

Syntax Data has joined forces with FTSE Russell to bring its indices into the Syntax Direct platform, allowing financial advisors to build more customized investment strategies. This partnership enhances direct indexing, a fast-growing segment in wealth management, by giving advisors greater flexibility to tailor portfolios for clients. 

The demand for personalized investment solutions has surged, with assets in direct indexing swelling from $100 billion in 2015 to over $615 billion today, according to industry estimates. With the integration of FTSE Russell indices, advisors can refine portfolios based on specific factors such as market trends, risk preferences, and fundamental metrics.

 The platform also simplifies managing large, diversified benchmarks, making institutional-grade strategies more accessible in private wealth management. By combining customization with scalability, this collaboration enables advisors to deliver more precise and cost-effective investment solutions.

Finsum: Having access to Russell brings a lot of flexibility to investors when paired with direct indexing and particularly allow them to increase value exposure. 

Post-pandemic, U.S. economic forecasts have consistently underestimated growth, a trend strategists like RBC’s Lori Calvasina believe will continue into 2025. RBC projects 2%–3% GDP growth for the year, while Bank of America estimates 2.4%, surpassing the Bloomberg consensus of 2.1%. 

Strong GDP growth is historically tied to better equity market performance, with stocks gaining 70% of the time when growth ranges between 2.1% and 3%. Value stocks, which perform well in periods of robust growth and higher interest rates, are expected to benefit from continued economic resilience and protectionist policies under the second Trump administration. 

This environment is favorable for ETFs focused on value stocks, such as Invesco S&P 500 Enhanced Value ETF (SPVU) and Vanguard Small-Cap Value ETF (VBR), which have lower P/E ratios compared to broader market ETFs. 

Finsum: These value-focused ETFs may see a strong turnaround in 2025, fueled by higher bond yields and resilient economic conditions.

With the S&P 500 showing a 2.4% increase this year, the market presents a strong opportunity for value investors. These investors typically look for undervalued stocks with strong fundamentals, especially when overall market conditions cause high-quality companies' prices to dip. 

Value stocks are often well-established companies that offer long-term growth potential while being less volatile than growth stocks. Some of the best beginner-friendly value stocks to consider are Berkshire Hathaway, Procter & Gamble, and Target. 

Berkshire Hathaway has shown consistent growth under Warren Buffett’s leadership, making it a solid choice for long-term value investing. Procter & Gamble and Target offer recession-resistant stability, with P&G being a Dividend King and Target leveraging its unique business model to stay competitive and provide consistent returns.

Finsum: P/E ratios suggests that prices might be elevated and for those looking to navigate volatility then value might be the play. 

Small-cap stocks in the U.S. have seen significant gains following Donald Trump’s presidential election victory, fueled by optimism over his economic policies. The Russell 2000 index surged about 6% since the election, outperforming major benchmarks, as investors anticipate benefits from tax cuts, deregulation, and increased tariffs that favor domestic businesses. 

However, concerns are growing that these same policies could stoke inflation, potentially leading to higher borrowing costs for small-cap companies heavily reliant on debt. Analysts note that the Federal Reserve may adjust its pace of rate cuts, further challenging the sector’s growth prospects. 

Despite the Russell 2000’s near 19% gain this year, its valuation—trading at 28.3 times forward earnings—remains high compared to the S&P 500. Experts suggest waiting for market pullbacks before adding small-cap stocks to portfolios.

Finsum: We think when adding small caps to consider the value play in addition to size, lower P/E might have a more long lasting performance.