U.S. Markets closed

Zacks Investment Ideas feature highlights: iShares S&P 500 Value ETF, PowerShares Dynamic Large Cap Value Portfolio, Vanguard Mega Cap Value ETF and iShares Morningstar Large Cap Value ETF

Zacks Equity Research

For Immediate Release

Chicago, IL- October 14, 2014 – Today, Zacks Investment Ideas feature highlights Features: iShares S&P 500 Value ETF (IVE-Free Report), PowerShares Dynamic Large Cap Value Portfolio (PWV-Free Report), Vanguard Mega Cap Value ETF (MGV-Free Report) and iShares Morningstar Large Cap Value ETF (JKF-Free Report).

Value ETFs to Buy After Market Selloff

The stock market’s wild gyrations last week suggest that the lack of volatility seen earlier this year may now be a thing of the past. Some investors fear that last week's sell-off could mark the start of a broader stock market correction (more than 10% decline for the S&P 500) not seen in last three years. But many others believe that it has created an attractive buying opportunity for long-term investors.

FOMC minutes released last week showed that the Fed is no hurry to raise rates. Many committee members expressed concern that slowdown in overseas markets—Europe, Japan and China in particular—could impact the domestic economy. Further, they were also worried that the recent strength in the US dollar could hurt US exports. (Read: Healthcare ETFs for your portfolio’s wellness)

The dovish tone of the minutes sent stocks surging to register their biggest daily gain in 2014 but those gains were rather short-lived. The very next day, major stock indexes saw their worst decline of the year as once again global slowdown worries prevailed.

While the shorter-term outlook for stocks is a bit cloudy now; I believe that the longer-term outlook remains positive. Here are some reasons why stocks may bounce back:

1)     The fed is still your friend—low interest rates are good for companies as well as for households;

 2)     US corporate health has been improving and companies are producing record earnings;

 3)     While many other regions in the world continue to struggle, US economic picture has been brightening;

 4)     Tumbling oil prices are adding to the nervousness now but they will boost the economic prospects in the longer term;

 5)     Stocks still remain more attractive compared to most other major asset classes.

At the same time, there is no dearth of bad news for the market—from European slowdown to Ebola outbreak—but I think the recent fears appear to be overblown. (Read: 3 Low Risk ETFs for an uncertain market)

At the same time, it is possible that the pain in high-beta names may continue for some time, given risk-off sentiment prevailing as of now. Some of these “glamorous” corners of the market may look enticing after the recent sell-off, but it now seems it would be safer to focus on big, boring and stable companies with attractive valuations. In a volatile market environment, growth stocks remain more vulnerable and prone to further declines.

Further in the past, strong bull markets have usually been led by growth stocks while value stocks have outperformed during periods of muted market performance. History also suggests that value stocks tend to perform well later in the economic cycle.

Also, given their proven performance over long term, value stocks and funds should be a predominant part of any ‘core’ portfolio. Below, we have analyzed these value ETFs that look most attractive in terms of valuation (P/E) compared to the broader iShares S&P 500 Value ETF (IVE-Free Report) and would make excellent holdings for a long-term portfolio.

PowerShares Dynamic Large Cap Value Portfolio (PWV-Free Report)

PWV is based on the “Dynamic Large Cap Value Intellidex" Index that seeks to provide capital appreciation while maintaining value exposure. The index applies a 10 factor style isolation process.

After the initial value screen, the fund evaluates stocks on additional dimensions including price momentum, earnings momentum, quality and management action.

The product holds $882 million in assets, invested in 50 securities. Financials, Information Technology, Energy and Healthcare occupy the top four spots for sector exposure.

It charges an expense ratio of 57 basis points. With its consistent outperformance over other broader large cap value ETFs, with less volatility, this ETF has justified its slightly higher fee.

Vanguard Mega Cap Value ETF (MGV-Free Report)

MGV tracks the CRSP US Mega Cap Value Index. The fund holds just 160 ultra-large cap value stocks. Very well-known value companies like Exxon, Microsoft, J&J, Wells Fargo and GE are among the top holdings. Top ten holdings account for about 31% of the portfolio. (Read: 3 Mega Cap ETFs Beating the Market)

The product charges a low expense ratio of just 11 basis points.
iShares Morningstar Large Cap Value ETF (JKF-Free Report)

JKF provides targeted exposure to undervalued large-cap US companies. It holds 81 companies with Exxon, GE and Wells Fargo being the top three holdings. Financials, Energy, Healthcare and Technology are the top sectors in terms of allocations.

The fund charges an expense ratio of 25 basis points and has an excellent dividend yield of 2.63% currently.

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros.  In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Click here for your free subscription to Profit from the Pros.
Get the full Report on IVE – FREE
Get the full Report on PWV – FREE
Get the full Report on MGV – FREE
Get the full Report on JKF – FREE
Follow us on Twitter:  http://twitter.com/ZacksResearch
Join us on Facebook:  http://www.facebook.com/ZacksInvestmentResearch
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Read the analyst report on IVE

Read the analyst report on PWV

Read the analyst report on MGV

Read the analyst report on JKF

Zacks Investment Research