Market Insight: Many value ETFs are a value trap
Ironically, the ETFs that should be particularly stable in times of crisis have been among the losers lately. This was to be expected, says Handelsblatt editor Andreas Neuhaus.
Value-ETFs, such as the Xtrackers MSCI World Value, experienced losses in the past week, with the latter dropping 3.6%. This is surprising as value stocks typically perform well during turbulent market phases. However, the decline can be attributed to the composition of value indices like MSCI World, which include stocks with low prices relative to their book value and expected earnings, such as Micron Technology, Qualcomm, and Cisco.
These stocks, which are actually growth or momentum stocks, had a significant weight of around 20% in the Xtrackers ETF and saw significant losses, with Micron Technology plummeting over 20%, after the US midterm elections raised concerns about the regulation of AI and the growth prospects of these companies.
Written by urgent.news from Handelsblatt's report — not a translation of it. Machine-written — may contain errors; check the original before relying on it.
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- Investment: Many value ETFs are a value trap handelsblatt.com
