The Consumer Price Index (CPI) rose again in August, though the increase was more modest than in the preceding several months. Still, the persistent vs. transitory inflation debate remains, well, persistent. With the inflation debate lingering for much of this year, investors are being treated to a laundry list of inflation-fighting investment ideas, including gold, real estate investment trusts (REITs), other hard assets, and Treasury inflation protection securities (TIPS), among others.
Value stock exchange traded funds climbed Wednesday as investors looked to the momentum behind the economic recovery. “The main factor in that move between growth and value is COVID and the Delta variant and its impact on the economy,” Tim Ghriskey, chief investment strategist at Inverness Counsel, told Reuters.
After the coronavirus pandemic put many businesses on hold for a year, companies have kicked off an unprecedented deal-making spree, bolstering banks and financial sector-related exchange traded funds.
With the S&P 500 on a seven-month winning streak, it may be hard to imagine that an equity market correction could be imminent. However, it is a possibility that investors should acknowledge — while remembering that corrections are natural and not as ominous as full-fledged bear markets.
Home to the likes of Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), and an assortment of other well-known growth stocks, the Nasdaq-100 Index (NDX) is a paradise for investors seeking growth exposure. Importantly, the Nasdaq-100 has a lengthy history of outperforming rival broader benchmarks, such as the S&P 500 and the Russell 1000.
The current macroeconomic backdrop has investors considering whether or not value’s ascendency still has legs to run. Yet it seems every market pundit has a different take on the growth vs. value debate.
The growth/value debate is likely to continue raging through year-end, particularly if economic growth shows signs of topping and if Treasury yields remain volatile. However,
Value stock exchange traded funds jumped Friday while broad U.S. market indices hit record highs, following Federal Reserve Chairman Jerome Powell’s reassurances that the central bank will not overreact to the inflation spike and will maintain patience in tapering its bond purchasing program.
Growth were supported by strength in the technology segment Thursday as investors braced for potential tapering in the Federal Reserve’s bond purchasing program. Fueling bets that the Fed will begin rolling back its accommodative policies, data from the Labor Department on Thursday revealed weekly unemployment claims dipped to a 17-month low, which further supported the view of a recovering job market, Reuters reports .
More than seven months into 2021, are likely investors acquainted with the factor landscape at this juncture, at least as it pertains to the ever-popular growth/value debate. Owing to the economic cycle and the reopening/reflation trade, value stocks trounced their growth rivals for much of the first half of the year.
Small caps have been strong performers in 2021 as well as energy and value—wrap all three in one fund and you get a dynamic ETF in the Invesco Dynamic Energy Exploration & Production ETF (PXE) . Looking specifically at the Russell 2000 for small cap strength, the index is up 11% for the year.
The first half rally in small caps doesn’t appear to be running out of steam, which could mean more strength in the second half with exchange-traded funds (ETFs) like the Invesco S&P SmallCap 600 Revenue ETF (RWJ) . RWJ, which is up over 40% so far in 2021, seeks to track the investment results of the S&P SmallCap 600 Revenue-Weighted Index.
On Thursday, J.P. Morgan Asset Management announced the launch of two active equity ETFs, JPMorgan ActiveBuilders U.S. Large Cap Equity ETF ( JUSA ) and JPMorgan ActiveBuilders International Equity ETF ( JIDA ). The funds join JPMorgan ActiveBuilders Emerging Markets Equity ETF ( JEMA ) to round out J.P. Morgan Asset Management’s ActiveBuilders ETF core equity suite.
The S&P 500 Value Index jumped 17.9% in the first half of the year, outperforming the broader S&P 500 by 110 basis points, and while there are recent inklings that growth stocks may be turning a corner, market observers are still bullish on value.
