Value ETF Demand & Returns Grow

September 17, 2019

There are a lot of people looking for signs that value stocks are back in the game, ready to outperform their growth counterparts after a decade or so of trailing them.

Last week, when markets seemed to punish some of the year’s leaders, such as growth and momentum strategies, as well as gold and even some Treasury funds, all eyes turned to the underdog, value. Is now the time?

ETF asset flows, while modest, would help corroborate the idea that investors are back to embracing value. Flows are a good indicator of investor sentiment, if a laggard one, and in the past week, some value ETFs did pick up assets while growth ETFs bled.

For example, the biggest value ETF in the market, the Vanguard Value ETF (VTV) saw $64 million in net inflows in the last week. The Vanguard Growth ETF (VUG), meanwhile, saw $12 million in net outflows at the same time. These flows came hand in hand with VTV’s outperformance for the week:

 

 

A pair of pure style strategies from Invesco saw similar action: the Invesco S&P 500 Pure Value ETF (RPV) gathered $40 million, while the Invesco S&P 500 Pure Growth ETF (RPG) lost a net of $6 million.

These funds, which fish for the top-third highest value stocks in the S&P 500 and top third highest growth-y stocks in the broader index, respectively, offer perhaps a purer exposure to these styles. And in the past week, their performance disparity was even wider. There is almost 6 percentage points between their returns, with value at the lead:

 

 

Bigger Picture

These net creations don’t really move the needle—VTV is a $50 billion fund, making a $64 million infusion barely a drop in the bucket. RPV has nearly $1 billion in total assets, so from a percentage of assets perspective, last week’s net inflows don’t add up to much.

That said, if you are looking for confirmation that investors are warming to the idea of returning to value stocks, the numbers are at least trending in that direction—to the extent that you can call one week’s worth of data a new trend.

Year to date, value ETFs remain laggards to their growth counterparts, and VTV and RPV are also underperforming the SPDR S&P 500 ETF Trust (SPY), which is up about 22% in 2019:

 

Charts courtesy of StockCharts.com

Find your next ETF

Reset All