Skip to Content
US Videos

This ETF Takes a Different Approach to Value

IShares MSCI USA Value Factor ETF eliminates the unintended sector biases that value-focused index funds often have.


Alex Bryan: Most traditional market-cap-weighted value indexes tend to overweight certain sectors like utilities, financial services, and energy stocks. These sector tilts can, of course, affect performance in the short term; but they may be unintended bets. So, investors who are concerned about taking these types of sector bets might consider a fund like iShares MSCI USA Value Factor ETF (VLUE).

This fund effectively targets the cheapest 30% of stocks in each sector, but it applies sector-neutral weightings, which means that it sets its sector weightings equal to the market-cap-weighted MSCI USA Index. What that does is it minimizes these types of unintended bets and homes in on the stocks that are the cheapest relative to their peers.

Alex Bryan has a position in the following securities mentioned above: VLUE. Find out about Morningstar’s editorial policies.