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Value stocks are fueling the small-cap rebound, and these ETFs are outperforming

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Proshares Russell 2000 Dividend Growers ETF News

Ishares Russell 2000 ETF,Ishares US Small Cap Value Factor ETF,Markets

Funds that focus on cheap stocks are beating the Russell 2000 in July.

This month's market rotation into small caps is being led by a rebound in cheap stocks. A rally in small caps can sometimes be a sign of speculative fervor, but an analysis of the top-performing nonleveraged small-cap funds show that it is the value factor finding a bid. According to FactSet, three of the top five small-cap exchange-traded funds in July are explicitly focused on value, including the iShares US Small Cap Value Factor ETF . That fund was up 11.

Investors can account for profitability by looking for stocks with lower price-to-earnings ratios, one of the metrics captured by many value funds. As of June 30, the broader IWM had a 14.4 P/E ratio, compared to about 11 for the value-tilted IWN, according to iShares.

 

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