Structural Shift or Recency Bias? Decoding Value’s Mixed Signals in 2026

Comparison of value investing with steady industries and growth investing with high-growth sectors showing trend graphs for 2026

Value ETF flows can send mixed signals because the label covers very different portfolio constructions. Some funds track broad large-cap benchmarks, while others lean toward smaller companies, quality screens, or more concentrated factor exposures. For investors, the real question is not whether “value” is popular, but which version of value is being bought and how it fits alongside existing core equity holdings.

That distinction matters when style leadership rotates. A value fund can behave very differently from the S&P 500 or from a growth-heavy benchmark because sector weights, earnings sensitivity, and index rules all shape results. If the market is rewarding financials, industrials, or other lower-multiple areas, a value ETF may benefit without necessarily signaling a durable regime change in the broader equity market.

Flow data also needs context. In ETF markets, assets often chase recent performance, which can create crowded entries just as expectations become more demanding. That is why investors should pay attention to turnover, holdings concentration, and the fund’s weighting method rather than relying on the category name alone.

For long-term portfolios, value is often most useful as a diversification tool. Rebalancing toward styles that look temporarily out of favor can help reduce concentration risk, but only when the position is sized with a clear role in the overall asset mix. The key decision is not whether to own value in isolation, but whether the exposure improves the portfolio’s balance across styles and market conditions.

Value investors may be facing a conviction crisis. Despite leading in performance so far in 2026, value ETFs have struggled to consistently gather assets, with some funds picking up significant net new money while others are bleeding just as much. Consider that the Vanguard Value ETF (VTV) has taken in $2.5 billion in net new money this year. Other popular value ETFs this year include PVAL, which has seen $2.7 billion in inflows. AVUV has picked up $2.3 billion. DFIV has taken in $1.7 billion, while JIVE and AVLV have each seen $1 billion in net creations in 2026. VALQ has seen $20 million in net new money. The list goes on. The flip side is equally populated. IWD has now bled $2.3 billion in net assets year-to-date. IVE is out $1.1 billion. SCHV has seen $375 million in net outflows. ASLV has lost $61 million while NULV has faced $46 million in net redemptions. The list — also — goes on. Is this mixed trend in investor demand a compelling investment case battling it out with recency bias and near-term market momentum benefiting growth-oriented opportunities? Value is still edging out growth in 2026, but its early-year strong performance relative to growth has waned dramatically in the past month. See related: Finding the Value Sweet Spot in 2026 Using the Vanguard Value ETF (VTV) vs. the Vanguard Growth ETF (VUG) as proxies for the U.S. large cap value vs. growth argument, we see that momentum change: VIT vs VUG Source: PortfolioLab

Structural Shift vs. Recency Bias

Coming into the year, there was a consensus around the opportunity in value. Market outlooks across asset management firms called out value’s time as a capital appreciation play, a concentration risk mitigator, and a key diversifier. Midway through the first quarter, J.P Morgan, as an example, argued that “cyclical, structural, and secular stars are aligning for value stocks.” They made the point that value’s moment to shine wasn’t merely a case of growth’s correction mode, but a much more profound shift in market opportunity. As the firm saw it, cyclical support came from fiscal easing and strong economic momentum; secular support stemmed from a broadening AI play that now reached industrials and materials sectors. And, finally, structural support came from business-friendly policy. A look at change in the S&P 500’s sector leadership this year reflects that. Structural Shift vs Regency BiasSource: State Street Investment Management

Changing Tide? 

Many of these conditions haven’t exactly changed, but geopolitical uncertainty centered on the Iran conflict, and prospects for stickier inflation and possibly flat-to-higher — not lower — rates ahead have dampened value’s compelling case. The early-year reset among growth’s biggest names also took away some of value’s valuation edge relative to growth. So far in the second quarter, value has struggled to keep up with growth’s renewed momentum.

VTV vs VUG vs VOO

Sector ViewVTV vs VUG vs VOO

Up Next: Eyes on Earnings

The ongoing earnings season could be the next mile marker in the value vs growth story this year. Value’s diversifying proposition remains strong, especially in the face of a concentrated market tilting heavily to tech and growth, but investors will be looking for clues on where opportunity lies in the near term. Results will carry a lot of weight. Coming today (April 29) are some of the most anticipated results in this earnings season from several of the growth-tech darlings. Microsoft, Meta, Alphabet, and Amazon are all reporting results today. Apple comes on Thursday. Many investors are walking into these results bullish on the growth-tech trade. Results will carry a lot of weight into what happens next. We know that macro conditions remain challenging; the Iran conflict is persisting; consumer confidence is forging new lows; and fears of inflation and market weakness remain very real. ETF asset flows confirm fresh appetite for growth ETFs in the second quarter. But they also show some emerging new green shoots of demand for value as investors are reminded of the importance of diversification in the current market. These are interesting times to be a value investor.

VTV vs VUG vs VOO – Sector ViewSector View

Source: VettaFi
https://www.etftrends.com/fixed-income-content-hub/structural-shift-recency-bias-decoding-values-mixed-signals-2026/

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