Why Value Strategy Now?
Growth has been outperforming for about a decade, but has been wobbly since mid-2019. The chart below shows the rolling 10-year performance of the stock market’s lowest price-to-earnings (P/E) value stocks against the highest P/E growth stocks. In the decade to February 2000, the most expensive stocks beat the cheapest by 2.7% a year, not much unlike the situation today.
10-Year Annualized Outperformance, Low P/E Stocks vs. High P/E
Annualized Performances by Decade
Growth and Value have rotated in and out of fashion each decade for the past four decades. During the 2010s, growth outperformed. Perhaps the 2020s are the decade for Value to shine.
Our Value Proposition
Our dividend and core Modern Alpha® ETFs naturally tilt toward Value.
While most ETFs weight by market capitalization, at WisdomTree, we believe fundamentals like dividends and earnings offer a more objective measure of company health. Our core and dividend-oriented Modern Alpha® ETFs weight by fundamentals, providing a natural tilt toward Value because the methodology keys in on stocks with higher dividend yields and/or lower price/earnings ratios. Furthermore, we rebalance back on a regular basis, enabling our ETFs to continue to focus on Value investing.
