Understanding Small Value ETFs

As a continuation of our previous discussion earlier this month on small value mutual funds, today I’d like to review the metrics of some popular small value ETFs. As a reminder, the smaller and more “valuey” the stocks that a fund owns, the higher the expected returns of the portfolio are.

The following table, with data from Morningstar as of June 30, 2014, shows various metrics for the seven small value ETFs with at least $100 million in assets under management.The list includes three ETFs from iShares, as well as funds from Guggenheim, SPDR, Vanguard and WisdomTree.

The table shows weighted average market capitalization to demonstrate each fund’s relative exposure to the size premium in addition to four different value metrics (price-to-earnings, price-to-book, price-to-sales and price-to-cash flow) to demonstrate each fund’s relative exposure to the premium provided by value stocks.

Read the rest of the article on ETF.com.

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