Single Factor Focus: Ranking The Top ‘Value’ ETFs

July 25, 2016

The most popular single-factor ETF so far this year is a low-volatility strategy, the iShares Edge MSCI Min Vol USA ETF (USMV | A-76). The fund has gathered more than $6.5 billion in fresh net assets as it rallied more than 14% year-to-date—roughly delivering double the gains the S&P 500 has shelled out thus far.

But there are those who are now beginning to argue the low-vol trade is crowded, overrun and overpriced. At its current strike price of $47.08 a share, USMV is trading at its highest level ever. Since its inception in 2011, the fund has seen total gains of some 104%—outpacing the SPDR S&P 500 (SPY | A-97) during that period by more than 5 percentage points. 

How Factors Stack Up This Year

If the low-vol factor has been delivering a stellar performance this year, value seems to be the year’s underdog.

There are many ways different ETF issuers slice and dice the value factor—there are 42 value U.S. equity ETFs in the market today, each delivering different returns based on their screens and methodologies.

But if you look at the single-factor family of funds from iShares as an example, you will see that in that lineup, value has underperformed low volatility by roughly 9 percentage points year-to-date.

The lineup includes:

The value fund VLUE has shelled out roughly a third of the gains of USMV, and is the worst-performing single-factor ETF of the bunch. Here’s how their year-to-date performances stack up: 


If the pundits are right, and value is indeed the single factor showing most upside potential ahead given recent performance and market outlook, investors have plenty of value funds to choose from, covering various pockets of market capitalization.

Of the 42 U.S. equity value ETFs in the market, only five capture the total market. VLUE is one of them. The other four are:


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