Hopes are high again for buying low
ETFs that track value stocks get US$5.5b in fresh funds but it's too early to declare victory as forces underpinning lower returns are still in place
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EXCHANGE-TRADED funds that track value stocks, the ones trading cheapest to earnings and book value, have received US$5.5 billion of fresh cash in 2016, data compiled by Bloomberg shows. The inflows stand out in a market where money is being withdrawn from practically everything else. Growth stocks, enjoying the longest winning streak over value in history, have seen withdrawals of US$6.2 billion.
While trying to beat the market with cheap shares has been a lost cause since 2006, the tactic may have found a champion in financial companies, a group whose valuations slid to a 14-year low relative to the rest of the market earlier this year. Banks are getting an extra boost from prospects that the Federal Reserve is about to raise interest rates, an action signalling faith in the economy that often boosts their profits.
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