What is a value ETF?

A value ETF invests in companies that screen as "cheap" relative to fundamentals, using metrics like price-to-earnings, price-to-book, or other valuation ratios. The exact definition depends on the index or provider.

Value strategies can behave very differently from growth strategies. Value ETFs often have heavier exposure to sectors like financials, energy, or industrials, which can make performance cycles feel lumpy.

If you add a value ETF, set expectations for tracking error versus the broad market. Value can underperform for years, but it can also lead in certain regimes. Understanding the methodology helps you stick with the allocation through the cycle.