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Value investing is the practice of trying to identify undervalued stocks in an effort to capitalize on the market’s underestimation of their intrinsic value. Typically, investors look to a company’s fundamentals, comparing them against similar businesses in order to identify potentially undervalued stocks. There are roughly 78 value exchange-traded funds (ETFs), not including leveraged and inverse funds, which allow investors to buy baskets of value stocks. An ETF can offer a more diversified way to invest in a value strategy because your money is spread across many stocks.
The best value ETF for Q1 2020 is the iShares Currency Hedged MSCI Italy ETF (HEWI). Below, we’ll explore the top 3 value ETFs.
iShares Currency Hedged MSCI Italy ETF (HEWI)
- Performance over 1 year: 30.6%
- Expense Ratio: 0.49%
- Annual Dividend Yield: 3.93%
- 3-Month Average Daily Volume: 554
- Assets Under Management: $1.9 million
- Inception Date: June 29, 2015
- Issuing Company: iShares
HEWI tracks the iShares MSCI Italy Index, a group of large- and mid-cap Italian equities. It also incorporates a currency hedge to mitigate fluctuations between the euro and U.S. dollar. The fund holds shares of the iShares MSCI Italy ETF (EWI), whose largest holdings are Enel, a natural gas utility; Intesa Sanpaolo, a bank; and ENI, an oil & gas conglomerate.
- Performance over 1 year: 27.5%
- Expense Ratio: 0.13%
- Annual Dividend Yield: 2.78%
- 3-Month Average Daily Volume: 14,304,059
- Assets Under Management: $11.9 billion
- Inception Date: December 16, 1998
- Issuing Company: State Street SPDR
Following the Utilities Select Sector Index, a capitalization-weighted index of stocks from the utilities sector of the S&P 500, XLU focuses on large-cap utilities companies. XLU’s largest holding is NextEra Energy Inc. (NEE), an electric utility company; Southern Co. (SO), a gas and electric utility holding company; and Duke Energy Corp. (DUK), an electric power holding company.
- Performance over 1 year: 25.7%
- Expense Ratio: 0.08%
- Annual Dividend Yield: 2.67%
- 3-Month Average Daily Volume: 157,476
- Assets Under Management: $1.0 billion
- Inception Date: October 21, 2013
- Issuing Company: Fidelity
FUTY utilizes the MSCI USA IMA Utilities Index as a benchmark. The index is a multi-cap collection of stocks, but FUTY focuses primarily on large-cap utilities companies. FUTY’s top three holdings are currently exactly the same as those of XLU above: NextEra Energy Inc., Southern Co., and Duke Energy Corp.
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