Global growth concerns have reemerged as weak U.S. economic data and rising trade tensions weigh on investor confidence. Market sentiment has taken a turn for the worst, shifting from last year’s highs when the S&P 500 gained about 24%.
After a strong start to 2025, rising 4.6% through mid-February, the broad market index reversed course, falling about 10% by mid-March. With volatility rising and the S&P 500 entering correction territory last week, investors are becoming more risk-averse, turning their attention to more stable investment strategies like value investing.
What is Value Investing?
Value investing is a strategy that focuses on purchasing stocks that are undervalued, based on some fundamental analysis, relative to their intrinsic value. Value investors actively seek out stocks currently overlooked by the market and seek to profit by purchasing them at a discount compared with their intrinsic value.
By purchasing and holding these undervalued stocks for the long term, value investors rely on the expectation that the market will eventually recognize their true value, allowing them to reap significant rewards.
Value stocks aim to exploit market inefficiencies, investor sentiment and short-term fluctuations, offering the potential for higher returns with lower volatility than growth stocks.
Appeal of Value Investing
Amid the growing recession fears and economic slowdown concerns, with consumers expecting inflation to rise over the next 12 months, value investing emerges as an appealing strategy for investor portfolios.
According to Reuters, driven by the chaos created by the trade policies of President Trump, investors are shifting cash into value funds. Per Lipper data, as quoted on Reuters, U.S. growth ETFs saw outflows of $3.6 billion this month, while U.S. value ETFs, which appear more resilient in downturns than growth stocks, attracted inflows of $1.8 billion.
Concerns of the economy being overvalued, as indicated by the sell-offs seen in the tech sector, especially the Magnificent Seven, strengthens the case for value investing as highlighted by the S&P 500 Pure Value Index, which has gained 2.22% year to date, while the S&P 500 Pure Growth Index has declined 4.73%.
Per economists at JP Morgan, the likelihood of a U.S. recession this year is forecast at 40%, a rise from the 30% projected in early 2025. Scott Bessent, the U.S. Treasury Secretary, as quoted on CNBC, has cautioned that there are ‘no guarantees’ the United States will avoid a recession.
Rising recession probability alone can trigger investor panic, leading to widespread sell-offs, ultimately hurting the market. Even so, the possibility of a downturn is enough to push risk-averse investors toward value investing.
Make Value Investing Effortless With ETFs
Value investing requires discipline and patience. Assessing a stock’s intrinsic value involves financial analysis and subjectivity, often making it a time-consuming and complex process.
Value investing through ETFs offers investors an easy and accessible way to follow this strategy. Using Value ETFs may present an appealing alternative, simplifying the implementation of the strategy for investors.
Value ETFs focus on stocks characterized by strong fundamentals and robust financial health, which trade below their intrinsic value, representing undervaluation. They offer the potential for higher, more stable returns and lower volatility than growth and blend stocks.
Value funds act as a cushion against market volatility. Additionally, Value ETFs can serve as a source of income through dividends. Investors with a medium to long-term investment horizon are better positioned to benefit from this strategy, with a stronger preference for long-term investing.
Adopting a value investing approach also serves as a strong diversification option for investors seeking to safeguard their portfolios.
Below, we highlight a few value ETFs for investors looking to implement a value investing strategy.
Vanguard Value ETF (VTV – Free Report)
Vanguard Value ETF has gathered an asset base of $137.19 billion. Regarding charging annual fees, VTV is the cheapest option, charging 0.04%, which is suitable for long-term investing. The fund has a one-month average trading volume of 2.79 million shares and currently flaunts Zacks ETF Rank #1 (Strong Buy).
Vanguard Value ETF has a dividend yield of 2.25%. It is the most attractive fund, being the most liquid option, and having the largest asset base among the other options.
JPMorgan Active Value ETF (JAVA – Free Report)
JPMorgan Active Value ETF has gathered an asset base of $3.13 billion and charges an annual fee of 0.44%. The fund has a one-month average trading volume of 434,000 shares.
JPMorgan Active Value ETF has a dividend yield of 1.18%.
Avantis U.S. Large Cap Value ETF (AVLV – Free Report)
Avantis U.S. Large Cap Value ETF has gathered an asset base of $6.02 billion and charges an annual fee of 0.15%. The fund has a one-month average trading volume of 852,000 shares.
Avantis U.S. Large Cap Value ETF has a dividend yield of 1.61%.
iShares Russell Mid-Cap Value ETF (IWS – Free Report)
iShares Russell Mid-Cap Value ETF has gathered an asset base of $13.12 billion and charges an annual fee of 0.23%. The fund has a one-month average trading volume of 559,000 shares and a Zacks ETF Rank #2 (Buy).
iShares Russell Mid-Cap Value ETF has a dividend yield of 1.88%.
Vanguard Small Cap Value ETF (VBR – Free Report)
Vanguard Small Cap Value ETF has gathered an asset base of $29.61 billion and charges an annual fee of 0.07%. The fund has a one-month average trading volume of 645,000 shares and a Zacks ETF Rank #2.
Vanguard Small Cap Value ETF has a dividend yield of 2.06%.
Financial Market Newsflash
No financial news published today. Check back later.
