Georgijevic Value stocks have been surging to new all-time highs, driven by a bullish sentiment around cyclical stocks following Fed Chair Powell’s remarks in Wyoming. While large caps experienced a slight dip from their morning highs on August 23, the overall market remains optimistic about the upcoming rate-cutting cycle by the FOMC.
One standout performer in the value stock space is the SPDR Portfolio S&P 500 Value ETF (NYSEARCA:SPYV). Despite some fits and starts earlier in the year, sectors like Financials, Real Estate, and Utilities have shown significant advances in recent months, indicating a strong appetite for traditional blue-chip equities.
As we head into the final months of the year, there is a sense of further upside potential for SPYV. However, it’s important to note that historically, September has been a weak month for the market. The S&P 500 has seen declines in September for the past four years, and SPYV has not been immune to this trend. Despite this, the ETF’s valuation remains reasonable, and its technical indicators are strong.
SPYV offers investors exposure to undervalued S&P 500 companies through the S&P 500 Value Index. This index focuses on large-cap value stocks in the U.S. equity market, selecting companies with favorable book value-to-price ratios, earnings-to-price ratios, and sales-to-price ratios. With assets under management reaching $22.9 billion as of August 22, 2024, SPYV has seen growth in recent months.
One of the attractive features of SPYV is its low expense ratio of 0.04% and a forward dividend yield slightly higher than that of the S&P 500. The ETF also boasts strong share-price momentum and a relatively low-risk profile compared to other equity ETFs. Morningstar has given SPYV a 4-star, Silver rating, highlighting its focus on large-cap value stocks with some exposure to domestic mid-caps.
Despite the positive outlook, it’s essential to consider the historical trends for SPYV in September. The month has traditionally been challenging for the ETF, with an average loss of 2.2% over the past 10 years. While the technical chart for SPYV shows signs of strength, including fresh all-time highs and a rising long-term moving average, investors should be prepared for potential consolidation in the coming months.
Looking at the sector breakdown of SPYV, Financials hold the largest weight at 22.4%, followed by Health Care and Information Technology. While Financials have been performing well recently, it’s crucial to maintain a diversified portfolio to mitigate risk. Additionally, the ETF’s exposure to different sectors helps balance out potential market fluctuations.
In conclusion, SPYV continues to show promising signs of growth and stability in a volatile market environment. While September may present challenges, the ETF’s strong fundamentals and technical indicators suggest a bullish outlook for the medium to long term. Investors should consider the historical performance of SPYV in September but remain optimistic about its potential for further upside in the coming months.
