What’s In Your Value ETF Might Surprise You

What’s In Your Value ETF Might Surprise You

A look at the contents of two key value ETFs.

Reviewed by: Todd Rosenbluth
Edited by: Todd Rosenbluth


  • S&P 500 Value Index-based ETFs gathered nearly $2 billion to start 2022, while investors pulled a  comparable amount from S&P 500 Growth-tracking funds.
  • The iShares S&P 500 Value ETF (IVE) is the largest of the S&P-based value ETFs, but it is built differently than its peer, the iShares Russell 1000 Value ETF (IWD).
  • For example, IVE holds stakes in Visa (V) and Mastercard (MA), neither of which is found in IWD, boosting IVE’s relative exposure to the information technology sector.

Fundamental Context

The S&P 500 Value Index rose 5.3% between November 30, 2021 and January 31, 2022, easily beating the S&P 500 Growth Index’s 6.1% loss. Value stocks featured strongly in the S&P 500's latest return to glory after the style index lagged the growth index by 2,000 basis points in the prior six-month period.

With renewed confidence that value may stay in vogue as the Federal Reserve raises interest rates, the three ETFs tracking the S&P 500 Value Index—IVE, the SPDR Portfolio S&P 500 Value ETF (SPYV) and the Vanguard S&P 500 Value ETF (VOOV) gathered $1.9 billion of ETF flows to start 2022, per CFRA, while S&P 500 Growth-based ETFs from the three top asset managers shed a similar amount.


Net Flows To ETFs Tracking S&P 500 Growth/Value Style Index

Source: CFRA’s ETF Data. As of February 4, 2022.


Before buying an index-based value ETF, it pays to look inside. While IVE, SPYV and VOOV seek to replicate the performance the same index, investors have a variety of value ETFs tracking different benchmarks to consider. For example, IWD has $58 billion in assets and is more than double the size of the $25 billion IVE; IVE is the largest of the three ETFs tracking the S&P 500 Value Index.

However, IWD is constructed differently than IVE in numerous ways. Most obvious is the number of holdings, with IWD’s 852 positions almost twice the amount of IVE’s 449, though many of the stocks owned by IWD have smaller market capitalizations, limiting the impact on fund performance.

However, among large cap companies, the index providers behind the two iShares value ETFs disagree on what a value stock is. For example, the S&P 500 Value-based IVE owns stakes in V and MA, but these information technology stocks are not a part of the Russell 1000 Value-based IWD. In contrast, Goldman Sachs (GS) is part of IWD and not IVE.

No Consensus

Since agreeing what is a value stock is hard, identifying value sectors is even more challenging. Investors tend to think of certain sectors as falling into the growth camp (consumer discretionary and information technology) and the value camp (consumer staples and financials).

However, the S&P 500 Value and the Russell 1000 Value indexes own stocks across all 11 GICS sectors. Yet as a result of the bottom-up processes to building the style indexes, IVE and IWD have different exposure to the sectors.

For example, IVE recently had larger stakes in consumer discretionary (7.3% of assets versus 5.5%), consumer staples (11% versus 7.5%) and information technology (12% versus 10%), but a smaller position in financials (16% versus. 21%).


Sector Exposure Of Popular Large Cap Value ETFs (% of assets)

Source: CFRA ETF Data. As of February 1, 2021.



If you believe the relative strength for value investing will persist, it pays to look under the hood and make sure you understand what is and is not part of the ETF you are considering.

CFRA has a higher star rating on IVE than IWD, as we believe IVE has a higher likelihood of outperforming the broader U.S. equity category over the next nine months based on its holdings, performance record and costs.


All of the views expressed in this research report accurately reflect the research analyst’s personal views regarding any and all of the subject securities or issuers. No part of the analyst’s compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this research report. For more information and disclosures, please refer to CFRA’s Legal Notice at https://www.cfraresearch.com/legal/.

Copyright © 2022 CFRA. All rights reserved. All trademarks mentioned herein belong to their respective owners.

Todd Rosenbluth is director of ETF and mutual fund research at CFRA, an independent research firm that acquired S&P Global Market Intelligence’s equity and fund business in October 2016. Follow him at @ToddCFRA.