Märkte Insight: Viele Value-ETFs sind eine Value-Falle

This week's market report reveals that many Value ETFs have been losing value. The Xtrackers MSCI World Value ETF, for example, dropped nearly 3.6% in a single week. This may seem surprising, as Value stocks are typically more resilient during turbulent market conditions. These stocks are typically undervalued companies, often with boring but solid business models.

However, a closer look at the development reveals an explanation. Value indexes like the corresponding variant of the MSCI World include stocks whose stock price is low relative to book value and expected net profit, as well as the company's value relative to generated cash flow. This recently applied to several companies in the artificial intelligence (AI) sector.

Among them are Micron Technology and Qualcomm from the United States, as well as Cisco, which provides critical network technology and data center connections. Together, these three stocks accounted for about 20% of the Xtrackers ETF. The AI stock expectations are questionable. Investors focus on the revenue and profit prospects associated with AI and have seen rapid price increases in the first half of the year.

However, ETFs do not invest qualitatively but rule-based, and these companies meet the Value criteria. Yet, the low valuation also showed a certain investor skepticism towards AI. If they expected the analysts' optimistic expectations to be realized, the stock prices should have been higher. Doubts about AI's earnings expectations were reinforced by the Democratic victory in the US midterm elections, which could lead to slower data center construction and stricter regulation of AI.

This raises additional concerns about the earnings expectations of AI suppliers, causing their stock prices to fall. Micron Technology, for example, lost more than 20% last week. The whole index also dropped accordingly. This poses a potential value trap for investors: the stocks are undervalued because investors doubt the earnings expectations.

At the same time, the stock level is still high enough that the stocks could fall sharply if the optimistic expectations are lowered. So far, Value ETFs have benefited from the AI focus. The MSCI World Value ETF, in particular, has benefited from its AI focus so far. Even after recent stock price declines, the ETF remains 32% above its previous value, more than twice as strong as traditional MSCI World ETFs.

As long as AI skepticism persists, AI-related stocks could recover, benefiting the MSCI World Value ETF. The crucial point for investors, however, is different: many classic Value ETFs do not primarily invest in solid, undervalued companies that reduce portfolio fluctuations, but in an ETF with undervalued stocks that are growth-oriented and heavily dependent on market sentiment. Therefore, it is essential for investors to examine the composition of the ETF.