IVE: Value ETF Lagging The Market Since 2020

seekingalpha07-03

iShares S&P 500 Value ETF weighs S&P 500 stocks based on their value characteristics.The IVE ETF is quite heavy in financials, but more balanced across sectors and holdings than its parent index.IVE ...

Source Link

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

We need your insight to fill this gap

Leave a comment

{"i18n":{"language":"en_US"},"isChannel":false,"data":{"share":"https://ttm.financial/m/news/2448161700?lang=en_US&edition=fundamental","thumbnail":"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1451567017/image_1451567017.jpg","is_english":true,"pubTime":"2024-07-03 00:28","share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","id":"2448161700","market":"sg","top_or_hot":-1,"title":"IVE: Value ETF Lagging The Market Since 2020","media":"seekingalpha","content":"<div>\n<p>iShares S&P 500 Value ETF weighs S&P 500 stocks based on their value characteristics.The IVE ETF is quite heavy in financials, but more balanced across sectors and holdings than its parent index.IVE ...</p>\n\n<a href=\"https://seekingalpha.com/article/4702070-ive-value-etf-lagging-the-market-since-2020\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>IVE: Value ETF Lagging The Market Since 2020</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nIVE: Value ETF Lagging The Market Since 2020\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-07-03 00:28 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4702070-ive-value-etf-lagging-the-market-since-2020><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>iShares S&P 500 Value ETF weighs S&P 500 stocks based on their value characteristics.The IVE ETF is quite heavy in financials, but more balanced across sectors and holdings than its parent index.IVE ...</p>\n\n<a href=\"https://seekingalpha.com/article/4702070-ive-value-etf-lagging-the-market-since-2020\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"OEF","symbol_name":"标普100指数ETF-iShares","start_time":0,"source_url":"https://seekingalpha.com/article/4702070-ive-value-etf-lagging-the-market-since-2020","article_id":"2448161700","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1451567017/image_1451567017.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2448161700","pubTimestamp":1719937688,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"iShares S&P 500 Value ETF weighs S&P 500 stocks based on their value characteristics.The IVE ETF is quite heavy in financials, but more balanced across sectors and holdings than its parent index.IVE h","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"OEF":"标普100指数ETF-iShares","FTA":"First Trust Large Cap Value AlphaDEX Fund","SG9999015341.SGD":"United Income Focus Trust Acc SGD-H","LU1074936037.SGD":"JPMorgan Funds - US Value A (acc) SGD","SG9999015358.SGD":"United Income Focus Trust Dis SGD-H","BK4559":"巴菲特持仓","SPY":"标普500ETF","LU0466842654.USD":"HSBC ISLAMIC GLOBAL EQUITY INDEX \"A\" (USD) ACC","LU0122376428.USD":"贝莱德世界能源基金A2","LU0795875169.SGD":"JPMorgan Investment Funds - Global Income A (div) SGD-H","BK4550":"红杉资本持仓","SG9999014567.USD":"UOB UNITED INCOME FOCUS TRUST FUND (USD) ACC","LU1732799900.SGD":"JPMorgan Investment Funds - Global Income A (irc) SGD-H","SDS":"两倍做空标普500ETF","IVE":"标普500价值指数ETF-iShares","IWD":"罗素1000价值指数ETF-iShares","FVAL":"Fidelity Value Factor ETF","VOO":"Vanguard标普500ETF","SG9999014559.SGD":"United Income Focus Trust Dis SGD","LU0320765646.SGD":"FTIF - Franklin Income A MDIS SGD-H1","LU0068578508.USD":"First Eagle Amundi International Cl AU-C USD","LU1839511570.USD":"WELLS FARGO GLOBAL FACTOR ENHANCED EQUITY \"I\" (USD) ACC","RPV":"Invesco S&P 500 Pure Value ETF","VOOV":"Vanguard S&P 500 Value ETF",".SPX":"S&P 500 Index","OEX":"标普100","XOM":"埃克森美孚","IE00B1XK9C88.USD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A\" (USD) ACC","UPRO":"三倍做多标普500ETF","BK4201":"综合性石油与天然气企业","FDN":"First Trust Dow Jones Internet I","BK4516":"特朗普概念","IE00BKDWB100.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5H\" (SGDHDG) ACC","SH":"标普500反向ETF","SPYV":"SPDR Portfolio S&P 500 Value ETF","BK4570":"地缘局势概念股","SG9999014575.USD":"UOB UNITED INCOME FOCUS TRUST FUND (USDHDG) INC","SSO":"两倍做多标普500ETF","LU1150488218.USD":"First Eagle Amundi Income Builder AU2-MD USD","BK4585":"ETF&股票定投概念","BK4534":"瑞士信贷持仓","LU1066051498.USD":"HSBC GIF GLOBAL EQUITY VOLATILITY FOCUSED \"AM2\" (USD) INC","IVV":"标普500指数ETF","LU1066053197.SGD":"HSBC GIF GLOBAL EQUITY VOLATILITY FOCUSED \"AM3\" (SGDHDG) INC","SPXU":"三倍做空标普500ETF","RSP":"平均加权指数ETF-Rydex S&P","LU2087621335.USD":"ALLSPRING GLOBAL FACTOR ENHANCED EQUITY \"A\" (USD) ACC","LU0300736062.USD":"FRANKLIN NATURAL RESOURCES \"A\" (USD) ACC","LU1150488135.SGD":"First Eagle Amundi Income Builder AHS-MD SGD-H"},"translate_title":"IVE：2020年以来价值ETF落后于市场","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"RPV":1,"VOOV":1,"RSP":1,"IWD":1,"SPYV":1,"SPY":1,"FDN":1,"FTA":1,"IVE":1,"FVAL":1,"VOO":0.9,"XOM":0.88,"SH":0.6,"SPXU":0.6,"SSO":0.6,"SDS":0.6,"UPRO":0.6,"OEX":0.6,"OEF":0.6,"IVV":0.6,"ESmain":0.6,".SPX":0.6},"content_text":"iShares S&P 500 Value ETF weighs S&P 500 stocks based on their value characteristics.The IVE ETF is quite heavy in financials, but more balanced across sectors and holdings than its parent index.IVE has lagged the benchmark since inception, especially since 2020.It has performed quite well relative to other passively managed value ETFs, but one of them did significantly better.   Dragon Claws This article series aims at evaluating ETFs (exchange-traded funds) regarding past performance and portfolio metrics. Reviews with updated data are posted when necessary. IVE strategy  iShares S&P 500 Value ETF (NYSEARCA:IVE) started investing operations on 5/22/2000 and tracks the S&P 500 Value Index. IVE has 438 holdings, a 30-day SEC yield of 2.09% and a total expense ratio of 0.18%. It is a direct competitor to SPDR Portfolio S&P 500 Value ETF (SPYV) and Vanguard S&P 500 Value ETF (VOOV), which track the same index.     IVE SPYV VOOV   Inception 5/22/2000 9/25/2000 9/7/2010   Expense Ratio 0.18% 0.04% 0.10%   AUM $32.66B $21.35B $4.88B   Av Daily Volume $94.79M $104.53M $13.79M   Click to enlarge IVE has the highest fee and is the largest of these three funds (measured in assets under management), and it comes in second position for liquidity in dollar volume. As described by S&P Global, S&P 500 constituents are ranked in Value and Growth styles using 3 valuation ratios and 3 growth metrics. The valuation ratios are book value to price, earnings to price and sales to price. By construction, 33% of the parent index constituents exclusively belongs to each style, and 34% belongs to both styles. The Value subset serves as the S&P 500 Value Index and is rebalanced annually. It is capital-weighted, with an adjustment for constituents belonging to both styles. A company with a value rank better than its growth rank is given a larger weight in the Value Index than in the Growth Index, and the other way. In the most recent fiscal year, the portfolio turnover rate was 29%. This article will use as a benchmark the parent index S&P 500, represented by SPDR® S&P 500 ETF Trust (SPY). Portfolio IVE invests almost exclusively in U.S. companies (99% of asset value), mostly in the large cap segment (70% per Fidelity classification). Financials (22.8% of assets) and healthcare (18.1%) are by far the two heaviest sectors. They are followed by industrials (11.4%) and consumer staples (10.2%). Other sectors are below 9%. Compared to the S&P 500, the fund underweights technology, consumer discretionary, communication and overweights all other sectors.   IVE sector breakdown (Chart: author, data: iShares and SSGA) The top 10 holdings, listed below with valuation ratios, represent 19.3% of asset value. The heaviest position weights 3.8%, so risks related to individual companies are low.   Ticker Name Weight% P/E TTM P/E fwd P/Sales TTM P/Book P/Net Free CashFlow Yield%   BRK.B Berkshire Hathaway, Inc. 3.78 11.96 21.35 2.37 1.53 28.24 0   JPM JPMorgan Chase & Co. 2.98 12.41 12.35 2.37 1.95 4.71 2.24   XOM Exxon Mobil Corp. 2.65 14.11 12.42 1.38 2.24 26.88 3.31   JNJ Johnson & Johnson 1.8 21.09 13.78 3.97 5.08 50.79 3.39   UNH UnitedHealth Group, Inc. 1.49 30.22 17.86 1.20 5.26 128.00 1.70   WMT Walmart, Inc. 1.48 28.83 27.67 0.83 6.71 66.40 1.23   BAC $Bank of America Corp(BAC-N)$. 1.39 13.82 12.42 1.75 1.21 26.30 2.40   CVX Chevron Corp. 1.38 14.41 12.05 1.48 1.80 37.73 4.17   PG Procter & Gamble Co. 1.22 26.61 24.84 4.79 8.17 57.40 2.47   COST Costco Wholesale Corp. 1.12 52.42 52.31 1.48 17.28 N/A 0.55   Click to enlarge Fundamentals In accordance with the strategy description, IVE is cheaper than the S&P 500 regarding valuation ratios and has lower growth rates, as reported in the next table.     IVE SPY   Price / Earnings TTM 19.87 25.7   Price / Book 2.65 4.46   Price / Sales 1.78 2.91   Price / Cash Flow 12.64 17.49   Earnings growth 15.95% 22.84%   Sales growth 7.37% 8.81%   Cash Flow growth 3.95% 8.95%   Click to enlarge Data by Fidelity. Performance  Since 6/1/2000, IVE has underperformed its parent index. However, the difference in annualized return is moderate (68 bps). The risk measured in maximum drawdown and volatility (standard deviation of monthly returns) is a bit higher, as reported below.     Total Return Annual.Return Drawdown Sharpe ratio Volatility   IVE 400.50% 6.92% -61.32% 0.41 15.94%   SPY 483.61% 7.60% -55.19% 0.45 15.37%   Click to enlarge Data calculated with Portfolio123. IVE and SPY have alternatively outperformed each other. In the last few years. IVE has lagged in 2020, 2021, 2023, and was more resilient in the 2022 market downturn.   IVE vs. SPY since 6/1/2000 (Seeking Alpha) The annual sum of distributions has increased from $1.74 per share in 2013 to $2.87% in 2023. This 10-year growth rate of 65% has outpaced the cumulative inflation (about 32%, based on CPI), but it lags the growth rate of SPY distributions: 98% in the same time.   IVE distribution history (Seeking Alpha)  Competitors  The next table compares characteristics of IVE and four passive large cap value ETFs with at least 7 years of historical data:  iShares Russell 1000 Value ETF (IWD) Invesco S&P 500 Pure Value ETF (RPV) Fidelity Value Factor ETF (FVAL) First Trust Large Cap Value AlphaDEX Fund (FTA).      IVE IWD RPV FVAL FTA   Inception 5/22/2000 5/22/2000 3/1/2006 9/12/2016 5/8/2007   Expense Ratio 0.18% 0.19% 0.35% 0.15% 0.60%   AUM $32.66B $55.38B $1.95B $801.36M $1.16B   Avg Daily Volume $94.79M $270.80M $10.89M $2.90M $2.83M   Holdings 442 852 98 132 188   Top 10 19.15% 17.90% 25.62% 34.87% 9.88%   Turnover 32.00% 14.00% 45.00% 43.00% 80.00%   Click to enlarge The next chart plots total returns, starting on 9/19/2016 to match all inception dates. IVE is the second-best performer behind FVAL.   IVE vs competitors since 9/19/2016 (Seeking Alpha) It also comes in second position over the last 12 months:   IVE vs competitors, 12-month return (Seeking Alpha)  Comparing IVE with my Dashboard List model  The Dashboard List is a list of 80 stocks in the S&P 1500 index, updated every month based on a simple quantitative methodology. All stocks in the Dashboard List are cheaper than their respective industry median in Price/Earnings, Price/Sales and Price/Free Cash Flow. After this filter, the 10 companies with the highest Return on Equity in every sector are kept in the list. Some sectors are grouped together: energy with materials, communication with technology. Real estate is excluded because these valuation metrics don't work well in this sector. I have been updating the Dashboard List every month on Seeking Alpha since December 2015, first in free-access articles, then in Quantitative Risk & Value. The next table compares IVE performance since 6/1/2000 with the Dashboard List model, with a tweak: the list is reconstituted annually instead of once a month to make it comparable to a passive index.     Total Return Annual.Return Drawdown Sharpe ratio Volatility   IVE 400.50% 6.92% -61.32% 0.41 15.94%   Dashboard List (annual) 1148.43% 11.05% -56.19% 0.6 17.25%   Click to enlarge Past performance is not a guarantee of future returns. Data Source: Portfolio123. The Dashboard List outperforms IVE by about 4% in annualized return. However, ETF performance is real, and the list is simulated. Price to Book: a risky concept of value Most value indexes have two weaknesses, and the S&P 500 Value Index is no exception. The first one is to classify all stocks on the same criteria. It means the valuation ratios are considered comparable across sectors and industries. Obviously, they are not: my monthly dashboard shows how valuation and quality metrics may vary across sectors. A consequence is to overweight sectors, where valuation ratios are naturally cheaper. It explains why financials have a heavy weight in IVE, and why technology is so underweight. Technology is a sector with large intangible assets (especially massive R&D and large user databases), which are not correctly reflected by valuation ratios. A few ETFs have a more sophisticated approach to value, like Fidelity Value Factor ETF (FVAL), reviewed here, and some actively managed value funds. The second weakness comes from the price/book ratio (P/B), which adds some risk to the strategy. Historical data show that a large group of companies with low P/B has a higher volatility and deeper draw-downs than a same-size group with low price/earnings, price/sales or price/free cash flow. The next table shows the return and risk metrics of the cheapest quarter of the S&P 500 (i.e. 125 stocks) measured in price/book, price/earnings, price/sales and price/free cash flow. The sets are reconstituted annually between 1/1/2000 and 1/1/2024 with elements in equal weight.     Annual.Return Drawdown Sharpe ratio Volatility   Cheapest quarter in P/B 9.86% -73.88% 0.47 23.25%   Cheapest quarter in P/E 10.63% -63.06% 0.55 19.88%   Cheapest quarter in P/S 11.60% -68.78% 0.54 22.70%   Cheapest quarter in P/FCF 12.65% -64.24% 0.62 20.63%   Equal Weight Index (RSP) 9.16% -59.92% 0.5 17.55%   Click to enlarge Data calculated with Portfolio123. This explains my choice of not using P/B in my Dashboard List model. Takeaway iShares S&P 500 Value ETF weights S&P 500 stocks based on their value characteristics. It is quite heavy in financials, but more balanced across sectors and holdings than the parent index. IVE has lagged the benchmark since inception, especially since 2020. iShares S&P 500 Value ETF has performed quite well relative to other passively managed value ETFs, but FVAL did significantly better. IVE may be used as a long-term investment, or in tactical allocation strategies switching between growth and value.  Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.2","shortVersion":"4.29.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2448161700"}