Top Value ETFs For December

Markets surged in November with the best election week performance since 1932, and a subsequent rally into value names and COVID-recovery stocks due to positive vaccine data from Pfizer PFE and BioNTech, Moderna, and Astrazeneca and Oxford University. The run has largely continued to kick off December despite lukewarm jobs reports for November, an uncontrolled pandemic, zero stimulus, and potential issues with vaccine supply chains and distribution. Value stocks, especially small-cap value stocks, have been the biggest winners, significantly outperforming growth stocks. Although investors will have to consistently weigh the very real headwinds on the ground, value stocks, especially if everything goes well with a vaccine, offer some of the best long-term opportunities for investors. Remember- markets always look forward. They are not as concerned about the present, and do not care about the past.

For broad exposure to sectors that could benefit the most from an economic recovery in 2021, investors can buy into Value ETFs. These ETFs focus on quality and value through investable indexes that have been undervalued and offer upside. Whether value stocks can maintain this pace is questionable. However, value investing is a tried and true long-term style of investing built especially for uncertain times- like now. Q.ai’s deep learning algorithms have identified several Top U.S. Value ETFs based on 90-day, 30-day, and 1-week fund flows. Our rating system usually includes Top Buys, Attractive, Neutral, Unattractive, and Top Shorts. This month, however, we only have three Neutral, three Unattractive, and three Top Shorts.

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Neutral

Schwab U.S. Large-Cap Value ETF (SCHV)

The first Neutral ETF on our list is the Schwab U.S. Large-Cap Value ETF SCHV . The ETF aims to track the total return of the Dow Jones U.S. Large-Cap Value Total Stock Market Index, and is on the smaller side with $7,688,235,335.29 AUM. The ETF has seen positive fund flows, with a 90-day fund flow of $227,806,972.90, 30-day fund flow of $144,815,942.65, and 1-week fund flow of $23,240,236.40. Its net expense ratio of .04% is very cheap and attractive.

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First Trust Large Cap Value AlphaDEX Fund (FTA)

The First Trust Large Cap Value AlphaDEX Fund FTA is our next Neutral ETF on the list. This ETF tracks the NASDAQ AlphaDEX Large Cap Value Index- an “enhanced” index created and administered by Nasdaq NDAQ employing the AlphaDEX stock selection methodology to select large-cap value stocks that trade on the exchange. With $758,801,109.18, this is by far the smallest ETF on the list in terms of AUM. The ETF has seen consistent fund flows, with a 90-day fund flow of $18,744,000.00, 30-day fund flow of $13,442,500.00, and 1-week fund flow of $8,195,500.00. Its net expense ratio of .62% is quite expensive. 

iShares Core S&P U.S. Value ETF (IUSV)

The final Neutral rated ETF is the iShares Core S&P U.S. Value ETF IUSV . This ETF aims to track an index of large and mid-cap U.S. value stocks such as Berkshire Hathaway BRK.B , United Health, Verizon VZ , Johnson & Johnso JNJ n, and Pfizer. The ETF has $7,468,364,352.00 AUM, and has seen mixed fund flows. The ETF has a 90-day fund flow of $186,756,215.00, a 30-day fund flow of -$48,899,855.00, and a 1-week fund flow of $91,082,695.00. Its net expense ratio of .04% is very reasonable.

Unattractive

Vanguard Mega Cap Value ETF (MGV)

The Vanguard Mega Cap Value ETF MGV is our first Unattractive Value ETF this month. This ETF aims to give investors diversified exposure to the largest value stocks in the U.S. such as Berkshire Hathaway, Johnson & Johnson, Procter & Gamble PG , United Health, and JP Morgan. The ETF is on the smaller side with $3,420,583,824.64 AUM, and has seen consistently positive fund flows. It has a 90-day fund flow of $138,729,802.08, 30-day fund flow of $123,503,000.00, and 1-week fund flow of $4,272,500.00. Its net expense ratio of .07% is cheap and decent.

Alpha Architect U.S. Quantitative Value ETF (QVAL)

The Alpha Architect U.S. Quantitative Value ETF is the next Unattractive ETF QVAL on our list. This ETF is a unique, fully automated ETF, that uses an algorithm to systematically select the cheapest high quality value stocks. The ETF’s automated stock selection process generally builds out a portfolio that holds between 40 and 50 stocks. In terms of AUM, this ETF is the largest on this list with $134,476,200.00 AUM. The ETF has seen positive fund flows, with a 90-day fund flow of $3,528,300.00, 30-day fund flow of $567,200.00, and 1-week fund flow of $823,500.00. Its net expense ratio of .79% is by far the most expensive on this list, and is not attractive.  

iShares Edge MSCI U.S.A. Value Factor ETF (VLUE)

The iShares Edge MSCI U.S.A. Value Factor ETF is our final Unattractive ETF VLUE . This ETF aims to track an index of U.S. large-cap and mid-cap value stocks. In terms of AUM, this ETF is on the smaller side with $8,979,745,569.75. The ETF has also seen positive fund flows, with a 90-day fund flow of $1,053,487,370.00, 30-day fund flow of $716,840,445.00, and 1-week fund flow of $141,890,430.00. Its net expense ratio of .15% is also decent. 

Top Shorts

iShares Russell 2000 Value ETF (IWN)

The first on the list of Top Shorts is the iShares Russell 2000 Value ETF IWN . Despite the surge in value stocks trading on the Russell 2000 index, as this ETF tracks, there could be some profit taking in the near term. In terms of AUM, the ETF is on the smaller side with $11,139,285,414.40 AUM. The ETF has seen consistently positive fund flows, with a fund flow of $1,175,227,540.00 over the last 90-days, a fund flow of $1,063,699,155.00 over the last 30-days, and a 1-week fund flow of $75,101,970.00. Its net expense ratio of .24% is pricier compared to other similar ETFs.

Vanguard Small-Cap Value ETF (VBR)

The next Top Short is another way to invest in undervalued small-caps- the Vanguard Small-Cap Value ETF VBR . This ETF tracks an index of diversified small-cap value stocks consisting of mainly Industrials, Financials, and Consumer Discretionary stocks. The ETF has $17,010,706,842.92 AUM and has seen positive fund flows over the last few months. The ETF has a 90-day fund flow of $874,788,050.87, 30-day fund flow of $640,672,263.26, and 1-week fund flow of $136,632,056.90. Its net expense ratio of .07% is also quite decent.

Vanguard Mid-Cap Value ETF (VOE)

The next Top Buy ETF on our list is the Vanguard Mid-Cap Value ETF VOE . This ETF tracks an index of mid-cap value stocks, with top holdings consisting of familiar names such as WEC Energy Group WEC , Eversource Energy, Willis Towers Watson, Motorola, and Clorox CLX . The ETF has $10,848,022,708.40 AUM and has seen positive fund flows over the last few months. The ETF has a 90-day fund flow of $364,833,064.34, 30-day fund flow of $379,554,794.82, and 1-week fund flow of $113,740,473.64. Its net expense ratio of .07% is also very reasonable.

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