2 value ETFs offering long-term opportunities as markets slide


Bear markets often create opportunities for seasoned investors as falling stock prices lead to new value investing options. So far this year, the and the lost 14.5% and 23.4%. In other words, larger markets are beginning to offer suitable entry points.

Finding quality stocks trading below their intrinsic value can become a critical and lucrative long-term strategy for seasoned investors. Intrinsic value refers to the real value of a stock or, in other words, the measure of the real worth of a stock (or any asset for that matter).

According to Warren Buffet, intrinsic value:

“…offers the only logical approach to assessing the relative attractiveness of investments and businesses.”

Quantitative measures generally help determine whether a stock offers value. Price/earnings (P/E), price/book (P/B), price/sales (P/S), price/earnings/growth ratios are examples of the most commonly used ratios. (PEG), debt ratio (D/E) or free cash flow (FCF).

What these metrics mean, or how to interpret them, needs more research and is usually industry dependent. the Investing Pro The website can rank stock, peer and industry values. Thus, a P/E of around 20x for a technology stock could mean that it potentially offers value.

However, the same argument does not necessarily apply to utility shares, where we see lower ratios. The NYU Stern School of Business provides an updated list of P/E ratios for different sectors in the United States.

Today’s article focuses on value stocks and features two exchange-traded funds (ETFs) that invest in them:

1. Vanguard S&P Mid-Cap 400 Value Index Fund ETF Equity

  • Current price: $152.32
  • 52 week range: $151.77 – $176.31
  • Dividend yield: 1.94%
  • Spending rate: 0.15% per year

Our first fund, the Vanguard S&P Mid-Cap 400 Value Index Fund ETF Equity (NYSE:)provides exposure to mid cap US value companies of the underlying . Names are selected based on three factors, including Earnings/Price, Book/Price, and Sales/Price.

This passively managed fund was first launched in September 2010. It currently holds a portfolio of 295 stocks, where the top 10 names represent around 9% of the $943 million in net assets.

Manufacturers have the largest share with 19.40% in sector allocations. Next come finance (17%), consumer discretionary (12.70%), real estate (11.30%) and information technology (10.40%).

Major holdings include Medical properties (NYSE:), a real estate investment trust (REIT) specializing in healthcare facilities; financial services stocks First National Horizon (NYSE:); name of P&C insurance Alleghenia (NYSE:); metal service band Reliance Steel & Aluminum Co. (NYSE:); and Aecom Technology (NYSE:)which provides infrastructure consulting services.

IVOV has come under pressure after hitting an all-time high in November 2021. The fund has lost around 9.6% since January and 9.7% over the past 12 months. Rear P/E and P/B ratios are 14.0x and 1.9x.

Although the current environment means gray clouds on Wall Street, mid-cap value stocks have historically benefited in an environment of high and rising interest rates. Thus, investors with a three to five year time horizon might consider further researching IVOV.

2. JP Morgan American Value Factor ETF

  • Current price: $34.44
  • 52 week range: $34.41 – $39.27
  • Dividend yield: 2.31%
  • Spending rate: 0.12% per year

Next on our list is the JPMorgan US Value Factor ETF (NYSE:)which provides diversified access to large-cap U.S. value companies from . The fund holds 340 holdings selected by relative valuation metrics, including book yield, earnings yield, dividend yield and cash flow yield.

weekly JVAL

weekly JVAL

JVAL began trading in November 2017. The top 10 names account for nearly 17% of $524.92 million in net assets. In terms of sector exposure, Technology leads with 27.3%, followed by Consumer Discretionary (14.8%), Healthcare (13.5%), Industrials (12.6 %) and finance (10.6%).

Among these are UnitedHealth Group (NYSE:); Apple (NASDAQ:); Exxon Mobil (NYSE:); Microsoft (NASDAQ:)and Johnson & Johnson (NYSE:).

We think JVAL deserves to be on the radar screen of value investors. JVAL hit a 52-week low yesterday and fell to 10.3% since the start of 2022. The P/E and P/B ratios stand at 13.10x and 2.35x.


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