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
ETFs With The Lowest P/B Ratios
Tables source: ETF.com Screener, powered by FactSet