2018 ETFs With The Lowest Valuations

August 07, 2018

Cheap Real Estate Options

While emerging market funds make up most of the low-P/E ETF list, there’s a handful of other names on there. The WisdomTree Global ex-U.S. Real Estate Fund (DRW) is one of those. It holds high-yielding real estate companies from around the world, including Hong Kong, Australia, Singapore, the U.K., Japan and France.

The iShares Europe Developed Real Estate ETF (IFEU) is a similar fund on the list. However, its focus is developed Europe, giving heavy weights to real estate stocks in the U.K., Germany and France.

With P/E’s of around 8, DRW and IFEU could be intriguing to value investors.

There’s Value In Value ETF

Ironically, there is only one value ETF among the ETFs with the lowest P/E’s: the Alpha Architect International Quantitative Value ETF (IVAL).

IVAL selects its holdings from the developed ex-U.S. equity universe, using the EV/EBIT (enterprise value-to-earnings-before-interest-and-taxes) ratio as its measure of valuation. It holds the cheapest 10% of stocks from its universe.

Even according to the different valuation measure we are using—P/E—the ETF stands out as cheap, with a ratio of 8.3. Top holdings are from Japan, the U.K., Australia and Germany.

Unwilling To Pay Up For Coal

Finally, taking the No. 20 spot on our low-valuation list is the VanEck Vectors Coal ETF (KOL). Even as numerous coal producers in the U.S. have gone bankrupt, the global coal industry continues to survive. It’s those global producers that KOL holds.

Emerging economies like China and India still use vast amounts of coal, but they are slowly switching to cleaner fuels like natural gas and solar. Coal is widely regarded as a fuel of the past.

Given the dismal outlook for the industry, investors are unwilling to pay for shares of global coal producers. KOL only has a P/E of 8.6.

For a full list of low-P/E ETFs, see the table below. Also included is a list of funds with low price-to-book (P/B) ratios, another valuation metric often used by investors, which measures the price of a fund divided by its book value per share.

 

ETFs With The Lowest P/E Ratios

Ticker Fund P/E Ratio
BRF VanEck Vectors Brazil Small-Cap ETF 4.71
TAO Invesco China Real Estate ETF 6.01
TUR iShares MSCI Turkey ETF 6.02
ERUS iShares MSCI Russia ETF 6.79
FLRU Franklin FTSE Russia ETF 6.90
RFEM First Trust RiverFront Dynamic Emerging Markets ETF 6.92
FHK First Trust Hong Kong AlphaDEX Fund 7.62
REM iShares Mortgage Real Estate ETF 7.63
EYLD Cambria Emerging Shareholder Yield ETF 7.70
DRW WisdomTree Global ex-U.S. Real Estate Fund 7.89
MORT VanEck Vectors Mortgage REIT Income ETF 7.98
SDEM Global X MSCI SuperDividend Emerging Markets ETF 8.06
FEM First Trust Emerging Markets AlphaDEX Fund 8.26
CHIX Global X China Financials ETF 8.27
IVAL Alpha Architect International Quantitative Value ETF 8.31
IFEU iShares Europe Developed Real Estate ETF 8.33
FPA First Trust Asia Pacific ex-Japan AlphaDEX Fund 8.48
FEMS First Trust Emerging Markets Small Cap AlphaDEX Fund 8.54
PAK Global X MSCI Pakistan ETF 8.56
KOL VanEck Vectors Coal ETF 8.64

 

ETFs With The Lowest P/B Ratios

Ticker Fund P/B Ratio
GREK Global X MSCI Greece ETF 0.61
DXJF WisdomTree Japan Hedged Financials Fund 0.64
SEA Invesco Shipping ETF 0.74
TAO Invesco China Real Estate ETF 0.80
ERUS iShares MSCI Russia ETF 0.81
FLRU Franklin FTSE Russia ETF 0.85
FKO First Trust South Korea AlphaDEX Fund 0.86
UEVM USAA MSCI Emerging Markets Value Momentum Blend Index ETF 0.88
FNDE Schwab Fundamental Emerging Markets Large Company Index ETF 0.89
DRW WisdomTree Global ex-U.S. Real Estate Fund 0.91
EUFN iShares MSCI Europe Financials ETF 0.94
BIZD VanEck Vectors BDC Income ETF 0.96
KGRN KraneShares MSCI China Environment ETF 0.97
XES SPDR S&P Oil & Gas Equipment & Services ETF 0.98
FPA First Trust Asia Pacific ex-Japan AlphaDEX Fund 0.98
SGDJ Sprott Junior Gold Miners ETF 0.98
FHK First Trust Hong Kong AlphaDEX Fund 0.99
PXJ Invesco Dynamic Oil & Gas Services ETF 0.99
IVLU iShares Edge MSCI Intl Value Factor ETF 1.00
REM iShares Mortgage Real Estate ETF 1.00

Tables source: ETF.com Screener, powered by FactSet

 

Email Sumit Roy at [email protected] or follow him on Twitter sumitroy2

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