The stock market has been getting hot this year and the risk for investors is that may end up buying stocks at or near their peaks. But if you focus on stocks with good valuations, you can set yourself up for better odds of success. And one exchange-traded fund (ETF) which focuses on value is the iShares Russell 1000 Value ETF (NYSE Arca:IWD).
The fund targets domestic stocks which have attractive valuations and which may look undervalued compared to other, comparable stocks. The fund also gives investors some solid diversification as it holds more than 840 stocks in its portfolio. The portfolio has an average price-to-earnings ratio of 18 and a price-to-book multiple of 2.4.
It also has a modest expense ratio of just 0.19%.
The top three holdings in the fund are Berkshire Hathaway (NYSE:BRK.B), JPMorgan Chase (NYSE:JPM), and Exxon Mobil (NYSE:XOM). Those three stocks account for just 8.3% of the fund’s total holdings. No other stock makes up even 2% of the portfolio’s weight.
Financial stocks account for the largest chunk of the ETF at 23% of all assets, followed by industrials and healthcare stocks, which each make up 14% of the fund’s holdings.
Over the past 12 months, the iShares Russell 1000 Value ETF has risen by 20% in value and when including its dividend, the total returns are at 23%. While there are hotter ETFs out there to buy today, this fund could be the better long-term play. Right now, investors are focused on growth stocks but that could change if the market becomes too hot, which is when value-oriented stocks could become attractive buys again.
