Growth stocks  have outperformed their value counterparts significantly over the past decade. And thanks to the COVID-19 pandemic, 2020 was a banner year for growth stocks while value stocks struggled to bounce back after a market correction last March.

However, a nationwide vaccination drive and the gradual resumption of industrial and economic activities are raising hopes for a solid economic recovery this year. The beginning of this trend is evident in the 4% annualized expansion of the U.S. economy in the fourth quarter.

But rising market volatility and a potential market bubble have been tempering the popularity of growth stocks. As a result, some investors are seeking to divert their capital to potential turnaround candidates that underperformed in the wake of the pandemic. However, betting on individual stocks could be risky and could turn out to be a value trap. t  ETFs can help investors mitigate this risk because they hold  broad and diversified securities exposure at minimal operating costs.

Here are four ETFs that we think are well-positioned to effectively manage through the market uncertainties and gain this year: Vanguard Value ETF (VTV), iShares Russell 1000 Value ETF (IWD), iShares Edge MSCI USA Value Factor ETF (VLUE) and SPDR S&P 500 Value ETF (SPYV).

Vanguard Value ETF (VTV)

VTV is a passively managed ETF that provides broad exposure to U.S. large-cap value companies and seeks to provide a convenient way to mirror  the performance of many of the nation’s largest value stocks. The fund tracks the CRSP U.S. Large Cap Value Index, which selects stocks from the top 85% of market capitalization based on multiple value factors. To determine value, VTV’s index uses P/B, forward P/E, historic P/E, dividend-to-price and sales-to-price ratios.

VTV has an MSCI ESG Fund Rating of A based on a score of 5.80 out of 10. The ETF currently has$63.83 billion in AUM and an expense ratio of 0.04%. VTV also pays an annual dividend of $3.04, which translates into a 2.57% yield.

VTV is exposed to various industries, with the financial sector  leading the way with a 19.6% weighting. The index also has 18%  exposure to the healthcare sector and 13.3% to  the  industrials sector. The top three among the fund’s 327 holdings  are Berkshire Hathaway Inc. Class B (BRK.B), Johnson & Johnson (JNJ) and JPMorgan Chase & Co. (JPM).

VTV closed yesterday’s trading session at $120.02.The ETF is up 18% in the past three months and has witnessed a net inflow of $3.85 billion in the same period. In addition , it is currently  trading just 3.3% below its 52-week high of $124.14.

How does VTV stack up for the POWR Ratings?

A for Trade Grade

A for Buy & Hold Grade

A for Industry Rank

A for Overall POWR Rating.

You cannot ask for better. It is ranked #1 of 83 ETFs in the Large Cap Value ETFs group.

iShares Russell 1000 Value ETF (IWD)

IWD tracks an index of U.S. large- and midcap stocks with the highest value characteristics, based on Russell’s style methodology. IWD’s portfolio draws its holdings from the Russell 1000 index and selects components from U.S. stocks ranked 1 to 1,000 by market-cap based on three  style factors.

IWD has an MSCI ESG Fund Rating of A based on a score of 5.73 out of 10. The fund’s expense ratio is 0.19% and it has  $44.20 billion in AUM. The ETF also pays an annual dividend of $2.81, translating to a yield of 2.07%.

IWD has a nearly 19.5% weighting in  the financials sector, followed by 13.6% and 131% exposure to the healthcare and industrials sectors, respectively. The top three holdings among  the 850 stocks held by the fund are also BRK.B, JPM and JNJ.

IWD closed yesterday at $137.81, gaining 19% in the past three months. In addition,  the ETF has witnessed a net inflow of $1.7 billion during the same period. IWD is currently  trading just 3.4% below its 52-week high of $142.69.

IWD’s prospects are also apparent in its POWR Ratings, which give it a Strong Buy rating. It also has an A for Trade Grade, Buy & Hold Grade and Industry Rank. It is ranked #2 of 83 stocks in the Large Cap Value ETFs group.

iShares Edge MSCI USA Value Factor ETF (VLUE)

VLUE seeks to track the investment results of the MSCI USA Enhanced Value Index, which is  composed of U.S. large- and mid-capitalization stocks with value characteristics and relatively lower valuations. Stocks are selected and weighted using fundamental metrics (earnings, revenue, book value and cash earnings), aiming for exposure to undervalued stocks in each sector.

VLUE has an MSCI ESG Fund Rating of A based on a score of 6.26 out of 10. The ETF has more than  $10.85 billion in AUM and an expense ratio of 0.15%. Moreover, it pays $2.11 as dividend translating into a yield of 2.32%.

VLUE currently  holds nearly 148 stocks. The fund has the 29.5% maximum exposure to the information technology sector, followed by the healthcare and consumer discretionary sectors with 12.9% and 12.3% weightings , respectively. VLUE’ top three holdings are Intel Corporation (INTC), AT&T Inc. (T) and Micron Technology, Inc. (MU).

VLUE closed yesterday’s trading session at $91.14. The ETF has gained nearly 26.7% in the past three months and has witnessed a net inflow of $2.03 billion in the same period. Moreover, VB  recently hit its 52-week high of $94.69 and is currently trading just 3.7% below it.

VLUE’s POWR Ratings reflect a promising outlook. The ETF is rated a Strong Buy with an A for Trade Grade, Buy & Hold Grade and Industry Rank, and a B for Peer Grade. Within the 83 Large Cap Value ETFs group, it is ranked #9.

SPDR S&P 500 Value ETF (SPYV)

SPYV is linked to the S&P 500 Value Index, which offers exposure to large-cap companies that exhibit value characteristics within the U.S. equity market. The Index selects stocks from the S&P 500 that exhibit fundamental value characteristics like book value-to-price ratio, earnings-to-price ratio, and sales-to-price ratio. In addition , stocks must meet certain liquidity criteria and must have positive reported earnings over the most recent four consecutive quarters.

SPYV has an MSCI ESG Fund Rating of A based on a score of 6.06 out of 10. The ETF currently has  $7.94 billion in AUM and an expense ratio of 0.04%. SPYV also pays an annual dividend of $0.82, which translates into a 2.41% yield.

SPYV is exposed to various industries with the financial sector  leading the way with a 19.2% weighting. The index also has an exposure 15.5% and 11.5% exposure to healthcare and information technology sectors, respectively. The top three among  the fund’s 327 holdings  are BRK.B, JPM and Walt Disney Company (DIS).

SPYV closed yesterday’s trading session at $34.48. The ETF is up 16.9% in the past three and has witnessed a net inflow of $1.47 billion in the same period.  It is currently  trading just 3.4% below its 52-week high of $35.71.

It is no surprise that SPYV is rated Strong Buy in our POWR Ratings system. It also has an A for Trade Grade, Buy & Hold Grade and Industry Rank. It is ranked #12 of 83 ETFs in the Large Cap Value ETFs group.

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VTV shares were trading at $119.84 per share on Friday morning, down $0.18 (-0.15%). Year-to-date, VTV has gained 0.74%, versus a 0.62% rise in the benchmark S&P 500 index during the same period.

About the Author: Sidharath Gupta

Sidharath’s passion for the markets and his love of words guided him to becoming a financial journalist. He began his career as an Equity Analyst, researching stocks and preparing in-depth research reports. Sidharath is currently pursuing the CFA program to deepen his knowledge of financial anlaysis and investment strategies. More...

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