IShares MSCI USA Value Factor and iShares Edge MSCI USA Value Factor ETFs construct a sector-neutral basket of the cheapest U.S. stocks, mitigating the impact of sector biases that plague more traditional value indexes. While the funds take on more risk than the Russell 1000 Value Index, they should provide better risk-adjusted returns over the long run. 

The funds track the MSCI USA Enhanced Value Index, which selects stocks based on their value traits relative to their sector peers and pins its sector allocation to the broader market. This approach shields the index from blindly piling into fundamentally cheaper sectors like real estate and energy, which breeds active risk that may not be rewarded. 

The index weights stocks using a combination of their value traits and market cap, resulting in a pronounced value tilt. The funds land in the cheapest edge of the large-value Morningstar Category and trade at cheaper valuations than the MSCI USA Index, their broader parent index.

The index’s pronounced value tilt and sector-neutral approach result in a meaningfully different portfolio than the Russell 1000 Value Index, with a 77% active share relative to it as of June 2023. Given its concentrated portfolio of 155 holdings and deep value exposure, investors should expect a bumpier ride than the category index.

Analyst Rating

A well-constructed deep-value strategy.

Associate Analyst

Mo'ath Almahasneh

Intel

AT&T

Cisco Systems

Micron Technology

Pfizer

General Motors

Ford Motor Company

Wells Fargo

Applied Materials

The MSCI USA Enhanced Value Index constructs a deep-value portfolio that tames the sector-specific risk that commonly plagues value strategies, earning an Above Average Process Pillar rating.

Above Average

Process

BlackRock’s industry-leading technology, global footprint, and extensive supporting cast earn an Above Average People Pillar rating.

The team employs BlackRock's Aladdin platform to fulfill much of its portfolio management tasks, and global trading desks allow traders to conduct foreign transactions in a cost-effective way. 

The U.S.-based iShares index equity team has endured some internal turnover at the top over the past few years. But index-tracking performance should remain tight, thanks to heavily automated processes, a large team of seasoned professionals, and several long-tenured managers who remain at the helm. Amy Whitelaw left the team in February 2023 for another role within the organization. Paul Whitehead replaced Alan Mason as a manager in January 2022, when Mason left to focus on the firm's customized institutional indexing capabilities. The broader index equity group, co-headed by Jennifer Hsui and Paul Whitehead, will continue to oversee iShares equity ETFs.

The European-domiciled fund is managed by the EMEA team, which has maintained a notably low rate of turnover. IShares' London-based ETF portfolio management team is now headed by Sid Swaminathan, who took charge in February 2022. His service with the firm dates to 2005, including his years with BGI. 
All managers interact with a wider team of traders and managers around the globe to execute the funds’ day-to-day operations. The larger number of managers also limits the impact of personnel turnover when it does occur.

People

BlackRock offers compelling options across asset classes and vehicles. It earns an Above Average rating for Parent. 
The firm’s approximately USD 8 trillion in assets under management, as of Sept. 30, 2022, gives it unparalleled scale and influence. It is a market-leading index fund provider globally, and its iShares exchange-traded fund franchise offers a low-cost lineup of core funds that investors can use to build a well-diversified portfolio for dirt cheap. The firm can be more adventurous in its ETF launches than some peers, so not everything it launches is appropriate for the masses. As a result, it is likely to have more ETF closures than peers that stick to the basic building blocks.  
The firm’s active fixed-income and multi-asset efforts also stand out as some of the best in the industry. Those benefit from BlackRock’s commitment to building a first-class risk management system via its Aladdin analytics software. The software is also available for sale to other firms and has proved to be a popular option for competitors, a testament to its usefulness. 
More recently, the firm has shifted its focus to ESG offerings and incorporating ESG across its investment lineup, leading to a political backlash in the United States.
BlackRock isn’t the best at everything it tries to do, but retail investors, financial advisors, and large institutions could all build robust portfolios using BlackRock’s products.

Parent

iShares MSCI USA Value Factor ETF

VLUE tracks an index of large- and mid-cap US equities. Stocks are selected and weighted using fundamental metrics (earnings, revenue, book value and cash earnings), aiming for exposure to undervalued stocks in each sector.

Looking for broad exposure to the Large Cap Value segment of the US equity market? You should consider the iShares MSCI USA Value Factor ETF (VLUE), a passively managed exchange traded fund launched on 04/16/2013.

Should iShares MSCI USA Value Factor ETF (VLUE) Be on Your Investing Radar?

Launched on 04/16/2013, the iShares MSCI USA Value Factor ETF (VLUE) is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Value category of the market.

Is iShares MSCI USA Value Factor ETF (VLUE) a Strong ETF Right Now?

iShares MSCI USA Value Factor ETF selects and weights stocks based on 3 valuation ratios. It keeps sector weights close to the benchmark, so it doesn't overweight financials like most value ETFs. VLUE has lagged other large-cap value ETFs in the last 12 months.

VLUE Has Been Lagging Competitors For 12 Months

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Active ETFs represent just a 6% share of the ETF markets, but advisors are gravitating toward them. The products have emerged as one of the fastest-growing categories within the ETF industry.

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VLUE invests in low-priced stocks. While it might sound like a truism that low-priced stocks are undervalued, price and value are distinct from each other.

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The core idea of value investing remains unchanged since its introduction by Graham and Dodd in the 1930s: fundamentally cheap stocks tend to beat expensive stocks on average. The iShares Edge MSCI USA Value Factor ETF tracks the MSCI USA Enhanced Value Index and provides cheap, efficient, and transparent systematic value exposure among US large caps.

VLUE: Transparent Value With Little Industry Bets

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Value stocks are less susceptible to trending markets and their dividend payouts offer safety in times of market turbulence.

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VLUE tracks the MSCI USA Enhanced Value Index, selecting 150 Large-Cap U.S. securities based on price-book, price-earnings, and enterprise value-operating cash flow ratios. Launched in April 2013, VLUE has amassed $7.6 billion in assets management and has a reasonable 0.15% expense ratio. However, its track record is poor.

VLUE: Why Deep-Value Tech Doesn't Work

VLUE is an inexpensive U.S. equities-centered fund favoring mega- and large-caps. VLUE has an interesting interpretation of the value strategy, with a composite used to select underpriced names, yet with sector neutrality that it pursues being a weakness.

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Hello! In this week's ETF Wrap, BlackRock's Gargi Chaudhuri, head of iShares investment strategy for the Americas, discusses ways for investors to play a world of higher rates and elevated inflation in 2023.

Where BlackRock sees ‘tremendous' market opportunities for ETF investors in 2023 after damage to stocks, bonds

We feel rather strongly that market continues to be overpriced and that investors are playing a dangerous game speculating on peak rates and inflation. Manufacturing data is coming down, yes, but it's still pretty intense, and inflation is likely to remain high.

VLUE Shows That Value Is The Only Way To Approach The U.S. Market

VLUE is surprisingly tech-heavy, and in a lot of instances, the exposure was in the right place for the latest earnings call. The issue is on the consumer side, where real recession risks are showing.

VLUE Might Have The Wrong Tech Exposures

VLUE is a large and mid-cap value ETF, keeping the sector weights of the broad market. It is much cheaper than the S&P 500 regarding aggregate valuation ratios.

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Nearly 85% of advisors surveyed by VettaFi during a recent webcast hosted with FlexShares believe that value will outperform growth over the next 12 months. This is likely impacted by recent performance, as the iShares Russell 1000 Value ETF (IWD) and the iShares S&P 500 Value ETF (IVE) have lost at least 1,450 fewer basis points than [.

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Some market watchers believe that markets are overpricing the Fed rate hikes. Hence, some undervalued top-ranked ETFs could be good picks.

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This article compares the Vanguard Mega Cap Value ETF with the iShares MSCI USA Value Factor ETF. Both are low-cost choices with similar performance track records worth considering. I wanted to look under the hood of each ETF to understand the differences. I found that although performance was about the same, each took a substantially different path.

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With the S&P 500 Index down sharply in 2022, it is easy to lose track of not all large-cap stocks down by a double-digit percentage. Indeed as of mid-May, there were 60 stocks up more than 10% and 32 up more than 20% for the year.

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S&P Global's president and CEO, Doug Peterson, and ETF Trends and ETF Database's head of research, Todd Rosenbluth, discuss the active versus passive fund performance gap on this week's “ETF Edge” hosted by Bob Pisani on CNBC. The S&P Dow Jones Indices released its annual report last week detailing the performance of active and passive [.

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News for iShares MSCI USA Value Factor ETF ETF (VLUE)