Displaying items by tag: value

Momentum remains the dominant factor in 2025, with the iShares MSCI USA Momentum ETF (MTUM) up 19.6% and the Invesco High Beta ETF (SPHB) close behind at 18.7%, both well ahead of the S&P 500’s 10.7% gain. 

Growth ETFs are trailing the leaders, with the iShares S&P 500 Growth ETF (IVW) delivering a solid 14.2% return. Factor leadership has been narrow, with momentum and high beta capturing most of the gains so far this year. 

At the same time, investors are showing renewed interest in high-dividend strategies, as the Vanguard High Dividend Yield ETF (VYM) hit a record high. Expectations of Federal Reserve rate cuts are making dividend payouts more attractive relative to bonds. 

Finsum: Momentum, high beta, and dividend strategies are setting the tone for factor performance in 2025.

In August 2025, small-cap and value stocks staged strong comebacks, with the Morningstar U.S. Small Cap Index up 4.6% and the Value Index up 5.1%, far outpacing large-cap and growth peers. 

Despite this rally, value stocks still trade at a 3% discount to fair value and small caps at a steep 15% discount, making them the most attractive corner of the market. Historically, small caps thrive when the Fed is easing and long-term rates are falling—conditions now taking shape as policymakers prepare to cut rates and Treasury yields trend lower.

The question is whether this marks a lasting rotation or just a temporary head fake, but investors continue overweight exposure given the difficulty of timing inflection points. Beyond style and size, the most undervalued sectors remain communications, real estate, energy, and healthcare, each offering selective opportunities. 

Finsum: Investors seeking value and long-term upside should continue looking to small-cap stocks, where discounts remain widest and potential gains greatest.

Momentum investing has gained traction as a powerful tool for capturing upside in post-recessionary bull markets, and the iShares MSCI USA Momentum Factor ETF (MTUM) exemplifies this approach. 

Designed to overweight stocks with strong recent performance, MTUM delivered a 1,030% total return from 2009 to 2025, recovering quickly from drawdowns and outperforming broader market indices. Its risk-adjusted returns, reflected in a Sharpe ratio of 0.68 and Sortino ratio of 0.90, show that it balances volatility with consistent performance, particularly when tilted toward high-growth sectors like tech. 

Academic research backs this strategy, highlighting its resilience and efficiency during economic recoveries, especially when managed with volatility controls. While MTUM carries market risk, its focus on large and mid-cap stocks helps mitigate exposure to smaller, more volatile names. 

Finsum: For long-term investors willing to ride short-term swings, MTUM presents a disciplined way to harness the enduring power of momentum.

Value investing, long championed by legends like Warren Buffett, has historically delivered strong long-term returns. However, in the past decade, growth stocks have significantly outpaced value due to low interest rates inflating the valuations of high-growth companies. 

From 2011 to 2020, large value funds underperformed growth funds by more than five percentage points annually, and in 2020 alone, the gap was a striking 32.2%. Although value outperformed in 2022, the trend reversed in 2023 and 2024, with growth indexes returning over 40% and 33%, respectively, compared to value’s 11.5% and 14.4%. 

Still, investors looking for long-term value exposure can consider top ETFs like the Vanguard Value ETF (VTV), iShares Russell 1000 Value ETF (IWD), and Vanguard Small-Cap Value ETF (VBR). 

Finsum: These funds offer broad diversification, low expenses, and dividend yields making them attractive options for value-focused portfolios.

As concerns mount that President Trump’s trade policies could slow the U.S. economy, investors are shifting to value funds, which are seen as more resilient in downturns. Lipper data shows U.S. growth ETFs saw $3.6 billion in outflows this month, while value ETFs gained $1.8 billion in inflows. 

Value funds, focused on sectors like banks and utilities, offer stability through cash-rich and undervalued companies, making them appealing amid rising volatility. Tech-heavy growth stocks, including the “Magnificent Seven,” have led the recent selloff as fears of overvaluation and slower economic growth take hold. 

Value stocks currently trade at a 41% discount to growth stocks, a wider gap than the 10-year average, drawing attention to funds like the AAM S&P 500 High Dividend Value ETF and Acquirers Small and Micro Deep Value ETF. 

Finsum: Small and mid-cap value stocks may now offer better opportunities, especially as investors question the safety of tech giants.