Using ETFs to Find Good Value Investments

Value investing profits from the market’s tendency to overreact to both positive and negative news

Dimitar Boyadzhiev 6 April, 2018 | 7:36AM

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With surging equity markets pushing stock valuations above historical levels, investors have increasingly been turning to value strategies. Value investing is one of the most popular and intuitive active investment strategies. Famously championed by Warren Buffett, it involves identifying and buying cheap or unloved stocks in the hope that the market has mispriced them and that they will rebound in price.

Bargain stocks can be unearthed using common accounting ratios such as price-to-book or price-to- forward earnings. They allow a valuation to be anchored to the strength of the underlying business and comparable across different stocks. Value investing profits from the market’s tendency to overreact to both positive and negative news.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
iShares Edge MSCI USA Val Fac ETF $ Acc6.02 USD-0.84
UBS ETF MSCI USA Value USD A dis GBP5,594.50 GBX-0.60

About Author

Dimitar Boyadzhiev  is a Passive Strategies Research Analyst for Morningstar

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