Why Value ETFs Investing Could Be a Smart Move Right Now

Amid potential near-term volatility, global growth concerns and a complex geopolitical environment, investors are likely to become more risk-averse with time, turning their attention to more stable investment strategies like value investing.Value investing focuses on purchasing stocks that are undervalued, based on some fundamental analysis, relative to their intrinsic value. Value investors actively seek out stocks currently overlooked by the market and aim to profit by purchasing them at a discount compared to their intrinsic value.By purchasing and holding these undervalued stocks for the long term, value investors rely on the expectation that the market will eventually recognize their true value, allowing them to reap significant rewards.Value stocks aim to exploit market inefficiencies, investor sentiment and short-term fluctuations, offering the potential for higher returns with lower volatility than growth stocks.The Case for Value InvestingWall Street is likely to face added economic uncertainty, as legal uncertainties around tariffs and the Supreme Court’s upcoming ruling could weigh on sentiment and trigger a negative market reaction. In this environment, value investing stands out as an attractive strategy for investor portfolios.With Fed Chair Jerome Powell cautioning that equities appear overvalued, value investing could offer a timely and strategic advantage. Even a comment hinting at caution or challenging market expectations can trigger investor panic, leading to widespread sell-offs, ultimately hurting the market. Even so, the possibility of a downturn is enough to push risk-averse investors toward value investing.According to CNBC, the S&P 500 took a breather from its recent rally as investors questioned the sustainability of the AI boom and whether the top AI firms have enough energy to fuel their growth plans. Rising concerns regarding the sustainability of the AI boom highlight the sector’s concentration risks and potential systemic vulnerabilities.Investing heavily in the technology sector to capitalize on AI’s growth potential comes with increased concentration risks. If the AI-driven stock market bubble bursts, heavily tech-reliant investor portfolios may suffer significant losses. Adopting a value investing approach serves as a strong diversification option for investors seeking to safeguard their portfolios.Value Investing Made Simple With ETFsValue investing demands patience and discipline, as determining a stock’s intrinsic value involves careful financial analysis and judgment, making the process often complex and time-intensive.Value investing through ETFs offers investors an easy and accessible way to follow this strategy. Using Value ETFs may present an appealing alternative, simplifying the implementation of the strategy for investors.Such ETFs focus on stocks characterized by strong fundamentals and robust financial health, which trade below their intrinsic value, representing undervaluation. They offer the potential for higher, more stable returns and lower volatility than growth and blend stocks.Value funds act as a cushion against market volatility. Additionally, Value ETFs can serve as a source of income through dividends. Investors with a medium to long-term investment horizon are better positioned to benefit from this strategy, making it particularly suited for those focused on long-term investing.Below, we have highlighted a few value ETFs for investors looking to implement a value investing strategy.Investors can consider Vanguard Value ETF VTV, JPMorgan Active Value ETF JAVA, Avantis U.S. Large Cap Value ETF AVLV, iShares Russell Mid-Cap Value ETF IWS and Vanguard Small Cap Value ETF VBR.Boost Your Portfolio with Our Top ETF InsightsZacks' exclusive Fund Newsletter delivers actionable information, top news and analysis, as well as top-performing ETFs, straight to your inbox every week.Don’t miss out on this valuable resource. It’s free!Get it now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Vanguard Value ETF (VTV): ETF Research Reports Vanguard Small-Cap Value ETF (VBR): ETF Research Reports iShares Russell Mid-Cap Value ETF (IWS): ETF Research Reports Avantis U.S. Large Cap Value ETF (AVLV): ETF Research Reports JPMorgan Active Value ETF (JAVA): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks