Where do you find value?

The Examiner

Last time, I discussed the market rotation currently in evidence from the high-flyer growth stocks to the more mundane garage sale value stocks. Today I want to give you a better idea of how this presents itself to investors. Since you have thousands of choices available to you, how can you determine where to look or what to buy if you want to invest in the value style?

Ron Finke

Even among the brand name exchange-traded funds, you can usually find these choices with access to the trading platform you use or one of the internet finance websites such as MSN or Yahoo. For example, iShares (offered by Black Rock) has a selection of growth, value and combined styles.

Best known of this brand is probably iShares S&P 500 Index Fund (IVV). It currently contains the stocks of 496 of the largest companies by market value in our domestic universe. Year to date, it has produced a little more than 10 percent appreciation). However, IVW is the symbol for the growth style ETF and it has earned about 8.6 percent thus far in 2021. IVE is the value version containing 431 companies’ stocks. It has outperformed with an 11.8 percent rise.

iShares also has a group of ETFs known by Russell Index sizes including the Russell 1000, 2000 and 3000 among specific style names. Think of the numbered series as having more stocks represented; the higher the number the smaller the included company sizes. So, the iShares Russell 1000 Growth ETF (IWF) has risen by 7.3 percent year to date while the Value Version (IWD) has gained 12.7 percent.

The difference has been even more pronounced in the smaller company space. The iShares Russell 2000 Value Index Fund (IWN) has run up 20.6 percent in price this year while the growth version (IWO) has managed a 5 percent gain.

Mutual funds are also categorized by their style orientations between growth, value or blend. The largest growth mutual fund is American Funds Growth Fund of America, weighing in at $269 billion total. Its Class A shares have produced a total return in 2021 of 6.69 percent. The largest fund of the value style is American Funds Washington Mutual with over $150 billion in it. Its gain thus far has been 11.1 percent in total return.

One of my favorite value funds is the American Century Small Cap Value fund, run from right here in Kansas City. I learned to love its performance in 2000 through 2002, when it rose in value handily in spite of the horrific general stock market collapse, caused by the growth stocks. Its 2021 total return is 28 percent this year. These returns are registered through Monday, April 12.

One currently providing benefits to us is Hodges Small Intrinsic Value Retail Fund (HDSVX). It can be characterized by feast or famine, but it is higher in one year by 134 percent and has risen by 29.8 percent since January 1.

Style and size of investments matter a great deal if you want to gain more than the typical averages for the investment markets.

(Past performance is no guarantee of future results. The advice is general in nature and not intended for specific situations.)

(Statistics from Morningstar Office, 2021.)            

Ron Finke is president of Stewardship Capital in Independence. He is a registered investment adviser. Reach him at rcfinke@stewcap.com.