Value exchange-traded funds (ETFs) are funds composed of stocks that trade below what their performance suggests. In other words, stocks that are undervalued. Value stocks stand out for their high dividend yields, low price-to-book (P/B) ratio and low price-to-earnings (P/E) ratio. Value ETFs also seek to capitalize on these undervalued assets by offering broad exposure to a variety of value stocks.
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Best value ETF
Here are the best value ETFs for small, mid and large cap companies based on YTD price change with expense ratios less than 0.25%.
Logo
ETF name and ticker
ETF description
Expense ratio
YTD return
Market Cap
Avantis U.S. Small Cap Value ETF (AVUV)
AVUV is an ETF designed to track and invest in small-cap value stocks within the U.S. market.
0.25%
0.75%
Small cap
SPDR S&P 400 Mid Cap Value ETF (MDYV)
MDYV is an exchange-traded fund designed to replicate the performance of mid-cap U.S. stocks with a value investing approach
0.15%
-4.40%
Mid cap
Franklin FTSE Italy ETF (FLIY)
FLIY is an ETF offered by Franklin Templeton, focused on tracking the FTSE Italy Capped Index.
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What Matt thinks about investing value ETFs
Value stocks are stocks that trade below what they're worth, but identifying these potential gems means analyzing metrics like price-to-book ratios and price-to-earnings ratios. Value ETFs will follow this strategy for you and provide an efficient way to diversify your portfolio. And because many value stocks are of well-established companies, value ETFs tend to provide an attractive dividend yield.
Let’s be honest: it’s been difficult for value to keep up with growth over the last decade. Cathie Wood’s tech-focused ARK Innovation ETF (ARKK) has produced average returns of 46.35% over the last five years, with one-year returns of 177.10%.
So why add value stocks or ETFs to your portfolio? Just ask Warren Buffett. Over time, value stocks are a predictable, stable investment. The valuations are lower, and these securities tend to fare better in times of market turmoil. My inclusion of funds such as the Vanguard S&P Mid-Cap 400 Value Index Fund ETF Shares aims at adding exposure to those smaller capitalized companies that have the potential to really grow.
According to our analysis, as of October 2023, the highest performing value ETFs are:
Small cap: Avantis U.S. Small Cap Value ETF (AVUV)
Mid cap: Vanguard S&P Mid-Cap 400 Value ETF (IVOV)
Large cap: Franklin FTSE Italy ETF (FLIY)
Yes, value ETFs are a great way to diversify your portfolio and manage risk. Value ETFs are composed of stocks that are undervalued. Value stocks stand out for their high dividend yields, low price-to-book (P/B) ratio and low price-to-earnings (P/E) ratio. Value ETFs also seek to capitalize on these undervalued assets by offering broad exposure to a variety of value stocks.
Shannon Terrell is a lead writer and spokesperson at NerdWallet and a former editor at Finder, specializing in personal finance. Her writing and analysis on investing and banking has been featured in Bloomberg, Global News, Yahoo Finance, GoBankingRates and Black Enterprise. She holds a bachelor’s degree in communications and English literature from the University of Toronto Mississauga. See full bio
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