High-Yielding ETF Stakes Currently Favorable for Investors
Cashing In on Value: A Breakdown of Global Equity ETFs
Step into the world of global investments, where Value-ETFs have been stealing the spotlight from ETFs tracking the MSCI World Index over the past year. But what separates these Value-ETFs from the norm? Let's explore three intriguing options.
The Heavyweight Champion
With a whopping 3.8 billion euros in assets under management, the iShares Edge MSCI World Value Factor ETF reigns supreme among global value ETFs. This behemoth ETF tracks the MSCI World Enhanced Value Index and boasts a portfolio of 400 stocks, some notable ones being Intel, Pfizer, and Shell. Shine a light on these stocks, and you'll find they play minor roles in the iShares Core MSCI World ETF.
The Green Giant
Enter the eco-friendly realm with the iShares MSCI World Value Factor ESG ETF (WKN: A3CUJR), a sustainable Value-ETF that manages 530 million euros. This eco-conscious ETF tracks the MSCI World Value ESG Reduced Carbon Target Select Index, investing in 224 stocks, with Microsoft and Apple as its two heavy hitters. The IT sector (24.9%) dominates this ETF, followed by financials (17.8%). Most investments originate from the US (61.4%) and Japan (11.7%).
The Contender
Since 2007, investors have welcomed the Invesco FTSE RAFI All World 3000 ETF, which, although not explicitly labeled as a Value-ETF, follows a value strategy. With just 39 million euros in assets, it's the underdog of the trio. This ETF invests globally in 3000 stocks, including Chinese stocks, unlike the two iShares-ETFs. It assembles stocks based on four fundamental criteria: book value, cash flow, dividend payments, and sales, which results in Exxon Mobil, Berkshire Hathaway, Shell, Chevron, and JPMorgan Chase being its top five individual stocks. In terms of sectors, financials (21.7%) and industrials (11.0%) take the lead, while US stocks (51.8%) and Japanese stocks (8.2%) lead in terms of countries.
Wondering what a balanced MSCI World Index might look like? Stay tuned for more insight!
Investor Disclosure: The author holds direct positions in the financial instruments mentioned in the publication or related derivatives that could benefit from the price development resulting from the publication: Pfizer, Apple, ExxonMobil, Berkshire Hathaway
Extra Insights:
- Value-ETFs focus on companies that exhibit value characteristics, such as lower price-to-book ratios, higher dividend yields, and lower price-to-earnings ratios compared to their peers within the same sector.
- Top holdings of Value-ETFs often include companies like Cisco Systems Inc, International Business Machines (IBM), AT&T Inc, Qualcomm Inc, Intel Corp, and Toyota Motor Corp.
- The MSCI World Index is a broad market index that tracks large and mid-cap companies across developed markets, covering approximately 1,500 stocks in 23 countries, representing about 85% of the market capitalization in each country.
- Top holdings of the MSCI World Index typically include a diverse set of large-cap companies across various sectors, such as Apple, Microsoft, Johnson & Johnson, JPMorgan Chase, Visa, Procter & Gamble, and Coca-Cola.
- The iShares MSCI World Value Factor ETF, an intriguing investment option, focuses on companies with lower price-to-book ratios, aligning with the value strategy, alongside companies like Pfizer, Intel, and Shell.
- In the realm of sustainable investing, the iShares MSCI World Value Factor ESG ETF stands out, managing investments in Microsoft and Apple, with a heavy focus on the IT sector, while maintaining a reduced carbon footprint.
- Although not explicitly labeled as a Value-ETF, the Invesco FTSE RAFI All World 3000 ETF follows a value strategy, offering a diverse portfolio of stocks, including Exxon Mobil, Berkshire Hathaway, and JPMorgan Chase, with financials and industrials dominating the sectors and the US and Japan accounting for the majority of investments.
- Technology, finance, and the intersection of the two make for an interesting combination when considering ETFs like the iShares Edge MSCI World Value Factor ETF, the iShares MSCI World Value Factor ESG ETF, and the Invesco FTSE RAFI All World 3000 ETF, as all three incorporate technology giants Microsoft and Apple into their portfolios.
