10 Best Value ETFs To Invest In

We have selected exchange traded funds that offer exposure to some of the largest companies in their respective sectors and have discussed these ETFs in terms of their top holdings. The purpose of the article is to give readers a basic overview of some of the prominent, affordable value ETFs in the US.

Best Value ETFs To Invest In

10. Vanguard Value Index Fund (NYSE:VTV)

The Vanguard Value Index Fund (NYSE:VTV) is a fund that tracks the performance of the CRSP US Large Cap Value Index, which measures the investment return of large-capitalization value stocks, following a passively managed, full-replication approach. The fund attempts to replicate the target index by investing all, or substantially all, of its assets in the stocks that make up the index, holding each stock in approximately the same proportion as its weighting in the index.

A premier holding of Vanguard Value Index Fund (NYSE:VTV) is Johnson & Johnson (NYSE:JNJ), the world’s largest healthcare firm. On July 7, Morgan Stanley analyst Terence Flynn raised the price target on Johnson & Johnson (NYSE:JNJ) to $174 from $173 and kept an Equal Weight rating on the shares after adjusting estimates ahead of the company’s upcoming Q2 report. He expects biopharma revenues to remain resilient in case economic activity slows and continues to believe companies that can deliver revenue growth in the second half of the decade are best positioned among the group

As of Q1 2022, 83 hedge funds in the database of Insider Monkey held stakes worth $7.4 billion in Johnson & Johnson (NYSE:JNJ). Of these, Arrowstreet Capital reported holding 6.65 million shares worth $1.17 billion in Johnson & Johnson (NYSE: JNJ).

Similar to Microsoft Corporation (NASDAQ:MSFT), NVIDIA Corporation (NASDAQ:NVDA), and Amazon.com, Inc. (NASDAQ:AMZN), Johnson & Johnson (NYSE:JNJ) is one of the stocks on the radar of elite investors amid recession fears.

9. iShares Russell 2000 Value ETF (NYSE:IWN)

The iShares Russell 2000 Value ETF (NYSE:IWN) is a fund that seeks to track the investment results of the Russell 2000 Value Index, which measures the performance of the small-capitalization value sector of the U.S. equity market. The fund generally invests at least 80% of its assets in the component securities of its underlying index. It has a top 10 holdings concentration of 4.67% and primarily invests in the financial services, real estate, industrials, and energy sectors.

Ovintiv Inc. (NYSE:OVV) is one of the biggest holdings in iShares Russell 2000 Value ETF (NYSE:IWN)’s portfolio. Earlier this June, JPMorgan analyst Arun Jayaram upgraded Ovintiv Inc. (NYSE:OVV) to Overweight from Neutral with a price target of $64, up from $56. Following the recent pullback, Ovintiv Inc. (NYSE:OVV) shares are trading at a 33% free cash flow yield based on 2023 estimates, the fourth highest yield in the exploration and production group and the third highest return of capital yield in the space at 17.4%. The analyst has increased confidence around the company’s execution following its presentation at JPMorgan’s energy conference.

Among the hedge funds tracked by Insider Monkey, 44 funds were bullish on Ovintiv Inc. (NYSE:OVV) at the end of Q1 2022, with collective stakes worth over $2 billion. Paul Marshall and Ian Wace’s Marshall Wace LLP is the leading position holder in the company, with 4.8 million shares worth $263.3 million.

Here is what Miller Value Partners Opportunity Equity has to say about Ovintiv Inc. (NYSE:OVV) in its Q4 2021 investor letter:

“The outlook for high multiple favorites depends to a great degree on interest rates. Warren Buffett likened interest rates to the force of gravity for asset prices. At current low levels, high valuations on long-duration assets can be justified. If interest rates move up, the adjustment will be painful. Market action early in the new year, with the swift moves up in interest rates and down in the Nasdaq, offers a taste of the medicine.

We underwrite all our names to have sufficient upside even if risk-free rates move up to 3% (a scenario, not a forecast!). As we evaluate the opportunity set, we find more attractive prospects in the classic value names. We often hear that people think value investing is dead, which only strengthens our conviction. Our gross exposure to classic value has risen from 44% a year ago to 62% currently.

One new name that illustrates the potential we see is Ovintiv (OVV), an oil and gas producer. We’ve seen a huge shift in the industry away from growth towards returns on capital, cash generation, and capacity discipline. OVV exemplifies the change.

OVV’s new CEO Brendan McCracken says: “We are at the forefront of driving innovation to produce oil and gas from shale both profitably and sustainably. We will generate superior returns and free cash flow by continuously improving capital efficiency and expanding margins while driving down emissions. We will deliver that value to our shareholders through disciplined capital allocation.”

Based on crude at $65 (well below the current $83.82 as of 1/14/22), the company guides to free cash flow generation of $11B over the next 5 years and $21B in the next 10 years. The company’s market cap is currently $10B and its enterprise value is $16B. It’s returning a significant portion of the capital to shareholders. If crude averages $70 in 2022, the company will return $700M to shareholders (in addition to paying down a significant amount of debt), which implies a yield of 7% at the current $39.53 price. In other words, there’s a good shot the company will return nearly its entire market cap to shareholders over the next 5 years.”

8. Vanguard S&P Small-Cap 600 Value Index Fund (NYSE:VIOV)

Vanguard S&P Small-Cap 600 Value Index Fund (NYSE:VIOV) invests in stocks in the S&P Small-Cap 600 Value Index, which comprises a group of value companies with market capitalizations between $300 million and $2 billion that trade on exchanges in the US. The fund attempts to replicate the target index by investing all, or substantially all, of its assets in the stocks that make up the index, holding each stock in approximately the same proportion as its weighting within the index. It invests most heavily in the financial, industrial, and consumer cyclical sectors.

A key holding of the Vanguard S&P Small-Cap 600 Value Index Fund (NYSE:VIOV) is Southwestern Energy Company (NYSE:SWN), a Texas-based natural gas exploration and production company. Wells Fargo analyst Nitin Kumar upgraded Southwestern Energy Company (NYSE:SWN) to Equal Weight from Underweight with a price target of $12, up from $10 on July 11. While an economic slowdown is certainly a risk for shale operators and commodity prices, the recent weakness is overdone, contends Kumar, who has updated price targets across the space to reflect updated oil and gas price outlooks, as well as higher inflation expectations, and made a number of associated rating changes.

As of the fiscal first quarter of 2022, 35 of the 912 hedge funds profiled by Insider Monkey had invested in Southwestern Energy Company (NYSE:SWN). David Iben’s Kopernik Global Investors is one of Southwestern Energy Company (NYSE:SWN)’s largest investors, with a $97 million stake in the company.

Greenlight Capital shared its outlook on Southwestern Energy Company (NYSE:SWN) in its Q1 2022 investor letter. Here’s what the firm said:

“SWN is the second largest producer of natural gas in the U.S. The company is well-situated to satisfy growing domestic and export demand. Over the short, medium and long term, Europe now intends to reduce its reliance on Russian energy and increase its use of U.S. LNG. Based on its 2021 year-end reserves – which assumed a $3.60/MMBtu long-term natural gas price – SWN has a PV-104 value of $13.83 per share. By the end of the first quarter, the U.S. natural gas 5-year forward curve averaged $4.28/MMBtu, while international seaborne LNG was close to $20/MMBtu. Over the intermediate term, with the benefit of substantial global investment in infrastructure, we expect prices for U.S. and international natural gas to converge. We acquired our shares at an average price of $6.58. SWN shares ended the quarter at $7.17.”

7. iShares MSCI USA Value Factor ETF (BATS:VLUE)

iShares MSCI USA Value Factor ETF (BATS:VLUE) is an exchange traded fund that seeks to track the investment results of the MSCI USA Enhanced Value Index composed of U.S. large- and mid-capitalization stocks with value characteristics and relatively lower valuations. The fund generally invests at least 90% of its assets in the component securities of the underlying index and may invest up to 10% of its assets in certain futures, options and swap contracts, cash and cash equivalents.

iShares MSCI USA Value Factor ETF (BATS:VLUE) holds a large stake in AT&T Inc. (NYSE:T), an American multinational technology and communications firm. Scotiabank analyst Maher Yaghi assumed coverage of AT&T Inc. (NYSE:T) on June 30 with a Sector Perform rating and a $22.50 price target. The analyst sees good prospects for U.S. stocks in terms of pricing, even in wireless, “potentially offering growth after many years of being under pressure.”

According to Insider Monkey’s data, AT&T Inc. (NYSE:T) was part of 74 public hedge fund portfolios at the end of Q1 2022, up from 70 funds in the prior quarter. D E Shaw is a significant shareholder of AT&T Inc. (NYSE:T), with 13.8 million shares worth $326.5 million.

In its Q4 2021 investor letter, Weitz Investment Management, an asset management firm, highlighted a few stocks and AT&T Inc. (NYSE:T) was one of them. Here is what the fund said:

“After several quarters of pandemic-induced outsized growth, new broadband connection growth has slowed for U.S. cable operators. This slower growth has coincided with a renewed push by competitors like Verizon and AT&T Inc. (NYSE:T) to offer high-speed data (either via wireless connects or by building new fiber-optic networks).”

6. Vanguard Russell 1000 Value Index Fund (NASDAQ:VONV)

Vanguard Russell 1000 Value Index Fund (NASDAQ:VONV) is an exchange traded fund that employs an indexing investment approach designed to track the performance of the Russell 1000 Value Index, which is designed to measure the performance of large-capitalization value stocks in the United States.

A premier holding of the Vanguard Russell 1000 Value Index Fund (NASDAQ:VONV) is Berkshire Hathaway Inc. (NYSE:BRK-B), a firm that operates in the insurance, freight rail transportation, and utility industries worldwide through its subsidiaries. Earlier this May, Keefe Bruyette analyst Meyer Shields reduced the price target on Berkshire Hathaway Inc. (NYSE:BRK-B) to $560,000 from $565,000 and maintained a Market Perform rating on the shares. According to the analyst, Berkshire Hathaway Inc. (NYSE:BRK-B)’s operating profit per share of $4,774 beat Wall Street’s projection of $4,278 in the first quarter, owing to higher-than-expected non-insurance profits that were somewhat offset by lower insurance underwriting revenue and higher-than-expected taxes.

At the end of the first quarter of 2022, 104 hedge funds in the database of Insider Monkey held stakes worth $19.06 billion in Berkshire Hathaway Inc. (NYSE:BRK-B), down from 108 the preceding quarter worth $19.32 billion.

As tech stocks like Microsoft Corporation (NASDAQ:MSFT), NVIDIA Corporation (NASDAQ:NVDA), and Amazon.com, Inc. (NASDAQ:AMZN) lose traction this year, value stocks like Berkshire Hathaway Inc. (NYSE:BRK-B) are gaining.

Here is what Weitz Investment Management has to say about Berkshire Hathaway Inc. (NYSE:BRK-A) in its Q1 2022 investor letter:

“The quarter’s standout performers were a pair of insurers, Berkshire Hathaway (BRK-A, BRK-B). Insurers typically benefit from a strong economy, as pricing tends to improve and the volume of risk to be insured grows. We also expect higher interest rates to translate into higher investment income as insurers recycle premium “float” into higher-yielding securities. Berkshire possess terrific management and top marks as opportunistic capital allocator.”

5. Avantis U.S. Small Cap Value ETF (NYSE:AVUV)

Avantis U.S. Small Cap Value ETF (NYSE:AVUV) is an exchange traded fund that, under normal market conditions, invests at least 80% of its assets in small capitalization stocks across all industries and sectors in the United States. The fund also invests in derivative instruments such as futures contracts, currency forwards, and swap agreements.https://5e76b32dc6e13ccfa0001ab0e0f48ef0.safeframe.googlesyndication.com/safeframe/1-0-38/html/container.html

Avantis U.S. Small Cap Value ETF (NYSE:AVUV) holds a large stake in Louisiana-Pacific Corporation (NYSE:LPX), a Tennessee-based manufacturer of building products for construction, repair and remodeling, and outdoor structures. On June 23, TD Securities analyst Sean Steuart lowered the price target on Louisiana-Pacific Corporation (NYSE:LPX) to $75 from $85 but maintained a Buy rating on the shares. He lowered target prices for seven of the 10 companies in his coverage universe, noting that forest product equities remain under pressure as investors discount an increasingly negative macroeconomic outlook. 

However, Steuart reiterates an Overweight bias on the sector given that balance sheets are in significantly better shape than was the case entering previous recessions.

Among the hedge funds tracked by Insider Monkey, 34 funds were long Louisiana-Pacific Corporation (NYSE:LPX) at the end of March 2022, with collective stakes worth $427.8 million. In the first quarter of 2022, Noam Gottesman’s GLG Partners held a prominent position in the company, with 756,178 shares worth about $47 million.

Here is what L1 Capital has to say about Louisiana-Pacific Corporation (NYSE:LPX) in its Q3 2021 investor letter:

“We reinvested the proceeds from the partial sale of Eagle Materials by increasing the Fund’s position in Louisiana-Pacific Corporation. We expect the company to deliver strong earnings and cash flow over coming years, and the company remains undervalued at its current share price.”

4. Invesco S&P 500 Pure Value ETF (NYSE:RPV)

Invesco S&P 500 Pure Value ETF (NYSE:RPV) is an exchange traded fund that invests at least 90% of its total assets in the securities of the S&P 500 Pure Value Index while tracking the performance of the index. Approximately 30.44% of the fund’s total assets are concentrated around the financial services sector.

Marathon Petroleum Corporation (NYSE:MPC), a top holding of the ETF, is the largest refiner of crude oil in the United States. It deals in the transportation and marketing of petroleum products in the nation and internationally. BMO Capital analyst Phillip Jungwirth initiated coverage of Marathon Petroleum Corporation (NYSE:MPC) with an Outperform rating and $135 price target on June 13. The analyst is positive on the company’s leading share buyback program, which he expects to have increasing sustainability given its “robust free cash flow profile” in 2022 and 2023. Jungwirth adds that Marathon Petroleum Corporation (NYSE:MPC) shares “still look inexpensive”.

Insider Monkey found 43 hedge funds long Marathon Petroleum Corporation (NYSE:MPC) at the close of Q1 2022. The total stakes of these hedge funds were valued at $2.51 billion. This is compared to 41 positions in the previous quarter with stakes of $2.22 billion. As of March 31, Elliott Management is the top stakeholder in Marathon Petroleum Corporation (NYSE:MPC) with stakes of $946.05 million.

Clark Street Value, an investment management firm, mentioned Marathon Petroleum Corporation (NYSE:MPC) in its Q4 2021 investor letter, stating:

“During the worst of covid, I bought some LEAPs on Marathon Petroleum (MPC) as a proxy for Par Pacific (PARR) since long dated options weren’t available on the later.  Those MPC calls expire next month and I’ll take profits, with PARR I’ve reduced my position throughout the year and might sell the rest early next year, I’ve owned it for 6-7 years and it has gone nowhere, they haven’t touched the NOLs, just a difficult business that I probably don’t understand as well as I should.”

3. SPDR S&P 600 Small Cap Value ETF (NYSE:SLY)

The SPDR S&P 600 Small Cap Value ETF (NYSE:SLY) seeks to provide investment results that correspond generally to the total return performance of the S&P SmallCap 600 Index, which includes U.S. companies typically between $600 million and $2.4 billion in market value. The fund holds 475 stocks with an average P/E of about 15, and invests heavily in the financials and industrial sectors, which make up 16.98% and 15.3% of the fund’s portfolio, respectively.

One of the largest holdings of the ETF is Lantheus Holdings, Inc. (NASDAQ:LNTH), a holding company that provides innovative diagnostics, targeted therapeutics and artificial intelligence (AI) solutions. Earlier this May, B. Riley analyst Justin Walsh initiated coverage of Lantheus Holdings, Inc. (NASDAQ:LNTH) with a Buy rating and $91 price target. Lantheus, which he calls the “leading diagnostic imaging and nuclear medicine company,” is well positioned in the rapidly growing radiopharmaceutical space and is expected to nearly double revenues in FY22 given the expected strong launch of prostate cancer imaging agent Pylarify, Walsh tells investors.

According to Insider Monkey’s database, Lantheus Holdings, Inc. (NASDAQ:LNTH) was in 35 hedge fund portfolios at the end of the first quarter of 2022, compared to 15 funds in the previous quarter. Israel Englander’s Millennium Management is the leading shareholder of the company, with a stake worth approximately $92.83 million.

Here is what Clearbridge Investments Small Cap Strategy has to say about Lantheus Holdings, Inc. (NASDAQ:LNTH) in its Q1 2022 investor letter:

“While companies with immature business models and no profits exist throughout the market, there are certain sectors where they congregate more easily, such as health care. As access to cheap capital recedes, however, many of these specialty drug and biotech companies will likely find it challenging to dismiss long periods of unprofitability. While we have had limited exposure in the sector, our focus on finding high-quality companies at attractive valuations has yielded positive results. For example, Lantheus Holdings (NASDAQ:LNTH) is a global leader in medical diagnostic imaging whose core business suffered during the COVID-19 pandemic due to a dramatic decline in hospital visits. As hospitals return to a level of normalcy, Lantheus’s core business has rebounded. Additionally, in late 2021 the company received approval for its new radio-pharmacological drug, Pylarify, for the treatment of prostate cancer, and initial sales have been well ahead of expectations. We believe it has a strong future in oncology diagnosis and treatment. As a result, Lantheus was our strongest individual performer for the first quarter.”

2. Invesco S&P 500 Enhanced Value ETF (NYSE:SPVU)

The Invesco S&P 500 Enhanced Value ETF (NYSE:SPVU) is based on the S&P 500 Enhanced Value Index and tracks the performance of stocks in the S&P 500 Index that have the highest “value score.” The fund generally will invest at least 90% of its total assets in common stocks that comprise the index. The fund tends to dip deeper when value is weak, but also explodes higher when value is back in style. That includes its performance in 2020, when it dropped peak-to-trough by 10% more than its peers, but also since then, rebounding by about 35% better. The fund’s portfolio is split roughly 70/30 between large and mid-cap stocks, and it has a heavy overweight in the financials sector, followed by the healthcare sector.

CVS Health Corporation (NYSE:CVS) is one of the main holdings of Invesco S&P 500 Enhanced Value ETF (NYSE:SPVU). It operates a network of retail pharmacies and clinics across the United States. The brands that operate under the company include CVS Pharmacy, CVS Caremark, MinuteClinic, and Omnicare. On June 16, Loop Capital analyst Joseph France initiated coverage of CVS Health Corporation (NYSE:CVS) with a Buy rating and $120 price target. The company is well-positioned in its core markets, and with less debt and stronger earnings growth, it can afford more strategic acquisitions, the analyst tells investors in a research note. France also expects CVS Health Corporation (NYSE:CVS)’s insurance business to capitalize on the growth of the Medicare market.

Of the 912 elite hedge funds tracked by Insider Monkey, 72 reported holding shares of CVS Health Corporation (NYSE:CVS), with combined positions worth $1.56 billion. This is in comparison to 71 hedge funds a quarter earlier. Harris Associates was the biggest shareholder of CVS Health Corporation (NYSE:CVS) at the end of the first quarter, with a stake worth $421 million.

Here is what ClearBridge Investments had to say about CVS Health Corporation (NYSE:CVS) in its Q4 2021 investor letter:

“Improving health remains a key impact theme for the portfolio, and over the past year or so we have increased our exposure to the health care sector, through the addition of CVS Health, which is well-positioned to help define the future of health care in terms of costs, quality and convenience.”

1. Vanguard Mega Cap Value Index Fund (NYSE:MGV)

Vanguard Mega Cap Value Index Fund (NYSE:MGV) is a fund that tracks the performance of the CRSP US Mega Cap Value Index. The index is a float-adjusted, market-capitalization-weighted index designed to measure the equity market performance of mega-capitalization value stocks in the United States. The fund holds each stock in almost the same proportion as the weighting of the stock on the index.

One of the biggest holdings of Vanguard Mega Cap Value Index Fund (NYSE:MGV) is UnitedHealth Group Incorporated (NYSE:UNH), a Minnesota-based managed healthcare and insurance company that offers healthcare products and insurance services to consumers. On June 16, Loop Capital analyst Joseph France initiated coverage of UnitedHealth Group Incorporated (NYSE:UNH) with a Buy rating and $575 price target. The analyst said UnitedHealth Group Incorporated (NYSE:UNH) is one of the best-positioned managed care names, with leading positions in commercial and government benefits markets. France added that he believes the company’s scale, industry leadership and innovative technology and practices constitute “major” competitive advantages.

As per Insider Monkey’s Q1 2022 data, UnitedHealth Group Incorporated (NYSE:UNH) was a popular stock among elite funds, as 103 hedge funds owned stakes in the company, up from 96 in the previous quarter. The collective value of these stakes is nearly $13 billion. With 3 million shares worth $1.48 billion, Eagle Capital Management was the company’s largest stakeholder in Q1.