Value vs Growth ETFs: A Comparison of Performance and Options

Value and growth ETFs are two popular investment options that cater to different investment strategies. Value ETFs focus on undervalued companies with strong fundamentals.

Growth ETFs, on the other hand, invest in companies with high growth potential. According to the data, value ETFs have historically outperformed growth ETFs over the long term.

However, growth ETFs have shown remarkable resilience during market downturns. In fact, some growth ETFs have even managed to outperform value ETFs during periods of economic recovery.

The key difference between value and growth ETFs lies in their investment approach. Value ETFs seek to buy undervalued companies at a low price, while growth ETFs focus on companies with high growth potential.

Value vs growth ETFs are essentially investment funds that track either value or growth stocks. Value stocks are considered undervalued and have the potential to provide a superior return. Growth stocks, on the other hand, are expected to outperform the market over time due to their future potential. There is no one-size-fits-all answer to which category is better, as historical performance yields surprising results.

Value and growth ETFs differ in several key ways. Value stocks are typically undervalued, priced lower than the broader market, while growth stocks are overvalued, priced higher than the broader market.

Value stocks have low P/E values, indicating that their current price is lower than their earnings. Growth stocks, on the other hand, have high earnings growth, suggesting that their profits are increasing rapidly.

Value stocks are relatively stable with low volatility, making them a safer investment option. Growth stocks, however, are high-risk with more volatility, which can be a concern for investors who want to minimize their losses.

Here's a quick comparison of value and growth stocks:

Value stocks often offer high dividend yields, making them attractive to income-seeking investors. Growth stocks, on the other hand, typically don't offer dividends, as the companies are reinvesting their profits to fuel further growth.

Value and growth ETFs have different performance characteristics. Growth stocks tend to perform well during economic expansions, while value stocks often outperform during market downturns.

Growth stocks can be riskier, with a higher probability of loss if the company can't meet growth expectations. For example, a company with a new product may see its stock price plummet if the product is a dud.

Value stocks, on the other hand, are often associated with lower risk and volatility, as they are typically found among larger, more established companies. These stocks may still offer some capital growth, even if they don't reach the predicted target price.

The performance of value and growth ETFs can vary significantly depending on market conditions. Here's a comparison of some popular value ETFs:

Value stocks are often considered to have a lower level of risk and volatility associated with them because they are usually found among larger, more established companies. They may still offer some capital growth even if they don't return to the target price predicted by analysts or investors.

Growth stocks, on the other hand, usually refrain from paying out dividends and instead reinvest retained earnings back into the company to expand. This can make them more volatile and potentially lead to a higher probability of loss for investors.

Historically, the success of growth and value investing has been cyclical, with periods where growth stocks have significantly outperformed value stocks and vice versa.

Here's a comparison of the historical performance of several value ETFs:

Growth stocks tend to perform well during economic expansions, when investors are willing to pay premiums for higher earnings growth. Conversely, value stocks often outperform during a market downturn, as they are perceived as safer investments due to their undervaluation.

The iShares Edge MSCI World Value Factor UCITS ETF has a fund size of 3,189 million euros.

This is significantly larger than the Xtrackers MSCI World Value Factor UCITS ETF, which has a fund size of 1,983 million euros.

The JPMorgan Global Equity Premium Income Active UCITS ETF USD (dist) has a TER of 0.35% p.a., making it one of the more expensive options on the list.

On the other hand, the iShares MSCI World Value Factor ESG UCITS ETF USD (Acc) has a TER of 0.25% p.a., making it one of the more cost-effective options.

Here's a comparison of the TERs for some of the ETFs on the list:

The iShares Edge MSCI World Value Factor UCITS ETF is domiciled in Ireland and uses optimized sampling as its replication method.

In contrast, the JPMorgan Global Equity Premium Income Active UCITS ETF USD (dist) is also domiciled in Ireland but uses full replication as its replication method.

Value stocks are usually larger, more well-established companies that trade below the price that analysts feel the stock is worth. They can become undervalued for many reasons, including public perception issues or scandals, but if the company's financials are still solid, value-seekers may see this as an ideal entry point.

Value stocks typically trade at a discount to either the price to earnings (P/E), book value, or cash flow ratios. Morningstar classifies all of the equities and equity funds that it ranks into either a growth, value, or blended category.

Growth stocks, on the other hand, are considered to have the potential to outperform either the overall markets or a specific subsegment of them for a period of time. These stocks can be found in small-, mid-, and large-cap sectors.

Investors should consider their risk profile, investment goals, and the current market outlook when choosing between growth and value stocks. For instance, those with a higher risk tolerance may prefer the potentially higher returns of growth stocks, while more conservative investors may opt for the perceived safety of value stocks.

If you're new to investing, it can be overwhelming to decide where to start. One way to begin is to consider your investment goals and risk tolerance. Value stocks, for example, are typically larger, more established companies that trade below their perceived worth.

Value stocks can be a good option for those looking for stability and lower volatility. They often trade at a discount to their intrinsic value, making them a potentially attractive choice for value-seekers. For instance, the Vanguard Value ETF (VTV) has a 5-year annualized return of 9.9 percent and an expense ratio of 0.04 percent.

Growth stocks, on the other hand, are often smaller companies with high growth potential. They may not be as stable as value stocks, but they can offer higher returns in the long run. The Fidelity High Dividend ETF (FDVV), for example, invests in large- and mid-cap companies with high dividend yields.

If you're looking for a mix of both value and growth, you may want to consider a blended ETF. The Vanguard Mid-Cap Value ETF (VOE), for example, tracks the CRSP U.S. Mid Cap Value index and holds about 185 stocks.

Here are some key differences between value and growth investing:

Ultimately, the right investment option for you will depend on your individual needs and goals. Be sure to do your research and consider factors such as your risk tolerance, investment horizon, and financial goals before making a decision.

The Vanguard Small-Cap Value ETF is a solid choice for investors looking to diversify their portfolios. It tracks the performance of the CRSP U.S. Small Cap Value index, which measures the returns of small-cap value stocks.

The fund holds more than 800 stocks, making it a well-diversified investment option. It's also relatively inexpensive, with an expense ratio of 0.07 percent.

Here are some key facts about the Vanguard Small-Cap Value ETF:

The fund's top holdings include Smurfit WestRock, Booz Allen Hamilton, First Citizen BancShares, and Builders FirstSource.

If you're trying to decide between value and growth ETFs, consider your risk profile and investment goals. This will help you determine which type of ETF is right for you.

Investors with a higher risk tolerance may prefer the potentially higher returns of growth ETFs, while more conservative investors may opt for the perceived safety of value ETFs.

You can use pre-built templates in YCharts Stock and Fund Screeners to narrow down your options. These templates can help you find stocks and funds that match your investment goals.

For example, the Trailing Revenue, EPS, and Cash Flow Growth screen finds stocks with strong revenue growth, earnings-per-share (EPS) growth, and cash from operations growth over several timeframes.

For investors who prioritize long-term growth, growth ETFs can be a great option. They often track a specific index, such as the S&P 500, and provide exposure to a wide range of stocks.

Growth ETFs typically hold a higher proportion of technology and healthcare stocks, which are known for their potential for high growth rates.

The fees associated with growth ETFs can be relatively high, ranging from 0.10% to 0.50% of assets under management.

Value ETFs, on the other hand, focus on stocks that are undervalued by the market, offering a potential for long-term growth at a lower cost.

Value ETFs often hold a higher proportion of financials and consumer staples stocks, which are known for their stability and potential for dividend income.

Investors who prioritize income generation may find value ETFs to be a more suitable option, as they tend to hold stocks with higher dividend yields.

Ultimately, the choice between value and growth ETFs depends on an investor's individual goals and risk tolerance.