Short interest for iShares Russell 1000 Growth ETF gives investors a sense of the degree to which investors are betting on the decline of iShares Russell 1000 Growth ETF's stock. Short interest data is updated every two weeks.

iShares Russell 1000 Growth ETF (ARCA:IWF), Short Interest Report

iShares Russell 1000 Growth ETF

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Bank of America&#39;s analyst highlights diverging paths of growth and value stocks, with growth outperforming by 20% and potential for further gains.

Value, Growth Stocks Trade At Record Highs But Long-Term Leadership Lies With One: Analyst

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Markets Waver On Mixed Economic Data: 5 ETFs Moving Wednesday

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Will Jerome Powell Be Hawkish Or Dovish? How These 5 ETFs Could React To The Fed&#39;s Rate Decision Wednesday

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Bank of America&#8217;s technical analyst Stephen Suttmeier shed light on the diverging paths of <a href="https://www.benzinga.com/money/best-growth-stocks">value and growth stocks</a>, underscored by the performance of the iShares Russell 1000 Growth ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IWF#NYSE">IWF</a>) and the iShares Russell 1000 Value ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IWD#NYSE">IWD</a>). 
Despite both reaching unprecedented heights, the future seems to favor one over the other, as Suttmeier <a href="https://www.benzinga.com/topic/expert-ideas">highlighted in a note. </a>
<h3 class="wp-block-heading">A Diverging Path: The Growth vs. Value Dichotomy</h3>
Over the past year, the gap between growth and value has widened, with growth outperforming value by 20 percentage points. 
This divergence has become even more pronounced over the last seven years, reaching a staggering near 100 percentage point difference. 
Chart: Growth Stocks Outperform Value, Doubling Relative Performance Over 7-Year Period
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="495" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/03/25123828/image-52-1024x495.png" alt="" class="wp-image-264258" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/03/25123828/image-52-1024x495.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/03/25123828/image-52-300x145.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/03/25123828/image-52-768x372.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/03/25123828/image-52-1536x743.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/03/25123828/image-52.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
The underperformance of value stocks compared to growth is notably attributed to the absence of the so-called Magnificent 7 stocks in its portfolio. This includes tech giants and industry leaders absent from the IWD&#8217;s top holdings.
The iShares Russell 1000 Value ETF features Berkshire Hathaway Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BKR#NYSE">BKR</a>), JPMorgan Chase &amp; Co. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/JPM#NYSE">JPM</a>), and ExxonMobil Corp. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XOM#NYSE">XOM</a>) as its top three holdings, with weights of 3.5%, 2.7%, and 2.1%, respectively. 
Conversely, the iShares Russell 1000 Growth ETF boasts Microsoft Corp. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MSFT#NYSE">MSFT</a>), Apple Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AAPL#NASDAQ">AAPL</a>), and Nvidia Corp. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/NVDA#NASDAQ">NVDA</a>) as its top three holdings, with weights of 12.1%, 9.5%, and 8.2%, respectively.
Notably, the growth ETF is heavily concentrated in three sectors — technology, consumer discretionary, and communication services. These sectors account for over 70% of the ETF&#8217;s composition, with the top 10 holdings comprising more than 50% of the portfolio. 
Conversely, the value ETF demonstrates greater diversification across sectors and stocks, with financials, industrials, and healthcare collectively making up 50% of its portfolio. Moreover, the top 10 holdings represent only 17% of the value ETF&#8217;s portfolio.
Technical Analysis: Value vs. Growth
From a technical standpoint, Bank of America&#8217;s analysis indicates that IWF has breakout point supports near 312 and 287-285, with upward pattern counts from its 2022-2023 cup and handle pattern at 370 and 420. Following a bullish triangle completion in 2022-2023, IWF has surged to new all-time highs, suggesting further upside potential.
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="495" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/03/25124228/image-53-1024x495.png" alt="" class="wp-image-264264" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/03/25124228/image-53-1024x495.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/03/25124228/image-53-300x145.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/03/25124228/image-53-768x372.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/03/25124228/image-53-1536x743.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/03/25124228/image-53.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
On the other hand, IWD shows breakout point supports at 171-169 and in the low 160s, with a bullish triangle target from 2022-2023 at 195 and an additional upside count at 208. 
While both ETFs demonstrate potential for further gains, the analyst emphasizes that Growth has maintained its market leadership, whereas Value remains in a long-term lagging trend compared to the S&amp;P 500 index.
Despite IWF&#8217;s relative strength stalling at its 2020 and 2021 highs versus the SPX, the leadership trend for Growth remains intact, particularly above its bullish and rising weekly relative Moving Averages (MAs). 
Conversely, the lagging trend for IWD versus the SPX persists below the declining 13-, 26-, and 40-week MAs, along with chart resistance at the January 2024 lower high and the prior 2021-2020 lows relative to the SPX.
<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="1024" height="495" src="https://editorial-assets.benzinga.com/wp-content/uploads/2024/03/25124506/image-54-1024x495.png" alt="" class="wp-image-264267" srcset="https://editorial-assets.benzinga.com/wp-content/uploads/2024/03/25124506/image-54-1024x495.png 1024w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/03/25124506/image-54-300x145.png 300w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/03/25124506/image-54-768x372.png 768w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/03/25124506/image-54-1536x743.png 1536w,https://editorial-assets.benzinga.com/wp-content/uploads/2024/03/25124506/image-54.png 1920w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
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Markets embraced an unexpected turn of events as Wednesday&#8217;s U.S. economic data releases fell <a href="https://www.benzinga.com/23/08/34112835/us-gdp-revised-downward-to-2-1-in-q2-reflecting-softer-economic-growth">short of market expectations. </a>
The initial response was positive, with market participants interpreting the data as an indication of potentially easing inflationary pressures, thus lowering the specter of further interest rate hikes by the Federal Reserve. However, as the morning session progressed, concerns over a potential economic deceleration reemerged, paring back the advances in the stock market.
<h2 class="wp-block-heading">Q2 GDP Revised Lower, Employment Growth Missed Expectations in August</h2>
The Bureau of Economic Analysis lowered growth projections for the second quarter of the year. The revelation painted a picture of the U.S. economy expanding at a more tempered pace of 2.1% on an annualized basis in Q2, in stark contrast to the estimate, which had pegged growth at a more robust 2.4%.
The same report also unveiled that the PCE price index, a closely monitored inflation gauge by the Federal Reserve, was revised downward from 2.6% to 2.5% in Q2. A parallel adjustment was registered for the core PCE price index, dropping from 3.8% to 3.7%. As a result, Thursday&#8217;s PCE price index announcement for July will likely be awaited with less trepidation by investors.
Signals from the labor market continue to support the idea of a slowdown in new job additions, with attention turning to the upcoming Bureau of Labor Statistics report this Friday. 
The <a href="https://www.benzinga.com/economics/macro-economic-events/23/08/34112480/adp-report-reveals-177-000-jobs-added-in-august-missing-predictions">ADP</a> offered a preview by reporting an increase of 177,000 jobs in August. This marked a significant decrease compared to the upwardly revised 371,000 jobs in July and also fell short of the expected 195,000.
Also Read: <a href="https://www.benzinga.com/markets/cryptocurrency/23/08/34104222/exclusive-watch-cathie-wood-predict-secs-loss-in-bitcoin-etf-case-in-benzinga-interview">EXCLUSIVE: Watch Cathie Wood Predict SEC&#8217;s Loss In Bitcoin ETF Case In Benzinga Interview</a>
<h2 class="wp-block-heading">Traders Lower Rate Hike Bets, Dollar Sinks</h2>
The U.S. dollar fell 0.5%, the largest daily drop since mid July, and is currently on track for its third consecutive session of decline. 
Simultaneously, Treasury yields, reflective of market sentiment on future Fed rate hikes, took a precipitous drop. The yield on the 2-year note fell to 4.85%, the lowest since Aug. 11. 
Implied probabilities derived from Fed futures assign a mere 9% chance of a rate hike in September, down from yesterday&#8217;s 14%. Looking ahead to November, the odds of a rate increase have ebbed from 49% to a 43% chance, CME Group&#8217;s Fedwatch tool showed.
Looking at major ETFs with over $15 billion in assets under management (AUM), here are the ones showing positive returns at 10:30 a.m. ET on Wednesday:
<ol>
<li>SPDR Gold Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GLD#NYSE">GLD</a>) up by 0.5% </li>
<li>Energy Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLE#NYSE">XLE</a>) up by 0.4% </li>
<li>Industrials&nbsp;Select Sector SPDR Fund (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLI#NYSE">XLI</a>) up by 0.3% </li>
<li>SPDR Portfolio S&amp;P 500 Growth (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPYG#NYSE">SPYG</a>) up by 0.2% </li>
<li>iShares Russell 1000 Growth ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IWF#NYSE">IWF</a>) up by 0.2%</li>
</ol>
<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="960" src="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/08/30103443/SPYG_2023-08-30_16-34-28_3aa4c-1024x960.png" alt="" class="wp-image-97542" srcset="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/08/30103443/SPYG_2023-08-30_16-34-28_3aa4c-1024x960.png 1024w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/08/30103443/SPYG_2023-08-30_16-34-28_3aa4c-300x281.png 300w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/08/30103443/SPYG_2023-08-30_16-34-28_3aa4c-768x720.png 768w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/08/30103443/SPYG_2023-08-30_16-34-28_3aa4c.png 1152w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
Read now: <a href="https://www.benzinga.com/general/movers-shakers/21/08/17298128/warren-buffett-turns-91-a-highlight-for-each-decade-of-his-life-1">Warren Buffett Turns 93: His Career, From Buying First Stock To Acquiring Berkshire, Apple Investments</a>
Photo: Shutterstock

Investors are on standby for the Federal Open Market Committee (FOMC) meeting&#8217;s interest rate decision, due to be announced on Wednesday, <a href="https://www.benzinga.com/federal-reserve">July 26, at 2:00 p.m. ET.</a>
While the market has already fully priced in a 25-basis-point rate hike to a target range of 5.25%-5.5%, the Fed&#8217;s communications regarding future moves are expected to <a href="https://www.benzinga.com/analyst-ratings/analyst-color/23/07/33351071/fed-meeting-in-focus-xx-on-wednesdays-interest-rate-announcement">have a significant impact.</a>
A more hawkish attitude from Fed Chair Jerome Powell, who may reaffirm the need for more hikes during his news conference, would likely catch markets off guard.
A more dovish Fed stance, indicating that current interest rates are appropriately high and that future adjustments will be based on economic data, on the other hand, might solidify existing market expectations on the end of tightening in July. 
Here are the five major ETFs that are likely to see significant activity and shifts in reaction to the Fed interest rate decision:
1) Invesco DB USD Index Bullish Fund ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UUP#NYSE">UUP</a>)
The largest exchange-traded fund (ETF) tracking the performance of the U.S. dollar index (DXY) is likely to witness immediate reactions following the Fed meeting.
A Federal Reserve leaning towards a more hawkish stance, maintaining a stringent approach against inflation despite recent declines and signaling a potential rate hike in September, is likely to significantly bolster the U.S. currency.
The dollar bulls, on the other hand, would suffer a serious defeat if the Federal Reserve becomes more dovish and signals the end of policy tightening. 
The dollar is on course to post 6 consecutive positive sessions leading up to the Fed meeting, a stretch not seen since May 2022. The UUP ETF, on the other hand, is flat year to date and down 0.7% from a month ago.
Also Read: <a href="https://www.benzinga.com/news/23/07/33352218/you-have-zero-chance-of-getting-hired-if-this-is-on-your-resume-says-former-google-recruiter">You Have &#8216;Zero Chance&#8217; Of Getting Hired If This Is On Your Resume, Says Former Google Recruiter</a>
Chart: Invesco DB USD Index Bullish Fund ETF Price Action In 2023
<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="778" src="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/25111228/UUP_2023-07-25_17-11-16_4d08d-1024x778.png" alt="" class="wp-image-74588" srcset="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/25111228/UUP_2023-07-25_17-11-16_4d08d-1024x778.png 1024w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/25111228/UUP_2023-07-25_17-11-16_4d08d-300x228.png 300w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/25111228/UUP_2023-07-25_17-11-16_4d08d-768x584.png 768w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/25111228/UUP_2023-07-25_17-11-16_4d08d-1536x1168.png 1536w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/25111228/UUP_2023-07-25_17-11-16_4d08d.png 1626w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
2) iShares 20+ Year Treasury Bond ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/TLT#NYSE">TLT</a>)
The iShares 20+ Year Treasury Bond ETF (TLT) is particularly sensitive to interest rate changes and the Federal Reserve&#8217;s policy stance. Because it tracks long-dated U.S. Treasury bonds with a remaining maturity of at least 20 years, small changes in yields have a substantial influence on the ETF&#8217;s value due to its elevated duration.
A more hawkish Fed, implying a more aggressive approach to inflation and future rate hikes, poses troubles for long-term bonds. A more dovish Federal Reserve, which recognizes the risk of growth issues and minimizes inflation risks, tends to push down long-term bond yields, which boosts the value of the ETF.
As of July 25, the TLT ETF is broadly flat year to date, with a more significant drop of roughly 5% in the previous three months, as long-term Treasury yields recently surged.
Chart: iShares 20+ Year Treasury Bond ETF Price Action In 2023
<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="778" src="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/25111840/TLT_2023-07-25_17-18-11_d2f5b-1024x778.png" alt="" class="wp-image-74589" srcset="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/25111840/TLT_2023-07-25_17-18-11_d2f5b-1024x778.png 1024w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/25111840/TLT_2023-07-25_17-18-11_d2f5b-300x228.png 300w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/25111840/TLT_2023-07-25_17-18-11_d2f5b-768x584.png 768w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/25111840/TLT_2023-07-25_17-18-11_d2f5b-1536x1168.png 1536w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/25111840/TLT_2023-07-25_17-18-11_d2f5b.png 1626w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
3) SPDR Gold Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GLD#NYSE">GLD</a>)
Gold investors are very concerned about the Federal Reserve&#8217;s interest rate decisions and potential future actions. Interest rates and Treasury yields have&nbsp;a substantial impact on the value of precious metals. 
A hawkish Fed, which raises interest rates and provokes the surge in&nbsp;Treasury yields, puts downward pressure on gold prices, and vice versa.
The GLD ETF has returned a positive 6.1% year to date. However, it has dropped 2% in the last three months as yields have recovered.
4) iShares Russell 1000 Growth ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IWF#NYSE">IWF</a>)
Growth stocks have&nbsp;demonstrated greater sensitivity to Federal Reserve meetings. Stocks with high valuations and optimistic growth expectations could be in jeopardy if the Fed shows an aggressive posture towards inflation by enacting further interest rate hikes this year.
Companies taking on riskier, potentially more lucrative long-term projects face higher financing&nbsp;costs&nbsp;as a result of higher interest rates. Growth stocks, on the other hand, may benefit from the expectation of future rate drops.
Growth stocks have experienced a surge in 2023, climbing 32% so far this year, primarily due to the rally driven by advancements in AI and progress in sectors such as technology, communication services, and consumer discretionary.
Chart: iShares Russell 1000 Growth ETF Price Action in 2023
<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="778" src="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/25112435/IWF_2023-07-25_17-24-16_23535-1024x778.png" alt="" class="wp-image-74590" srcset="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/25112435/IWF_2023-07-25_17-24-16_23535-1024x778.png 1024w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/25112435/IWF_2023-07-25_17-24-16_23535-300x228.png 300w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/25112435/IWF_2023-07-25_17-24-16_23535-768x584.png 768w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/25112435/IWF_2023-07-25_17-24-16_23535-1536x1168.png 1536w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/25112435/IWF_2023-07-25_17-24-16_23535.png 1626w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
5) ProShares Trust VIX Short-Term Futures ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VIXY#NYSE">VIXY</a>)
Volatility in the stock market, as measured by the VIX index, has experienced a significant decline since the last quarter of the previous year. The fear index has not only returned to pre-pandemic lows but has also endured nine negative months out of the last 10, currently maintaining a 5-month losing streak.
The volatility index has seen a decrease of 59.2% since the start of the year. It&#8217;s natural to question whether the Federal Reserve has the ability to alter this trajectory. The answer largely depends on the actual impact of the upcoming event.
The VIX may experience an uptick if the Fed signals intentions to hike interest rates more aggressively and speed up quantitative tightening, both of which could trigger market instability. As the Fed&#8217;s decision unfolds, investors are closely monitoring the VIXY ETF.
Chart: ProShares Trust VIX Short-Term Futures ETF Price Action in 2023
<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="778" src="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/25113428/VIXY_2023-07-25_17-34-10_d3bd7-1024x778.png" alt="" class="wp-image-74596" srcset="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/25113428/VIXY_2023-07-25_17-34-10_d3bd7-1024x778.png 1024w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/25113428/VIXY_2023-07-25_17-34-10_d3bd7-300x228.png 300w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/25113428/VIXY_2023-07-25_17-34-10_d3bd7-768x584.png 768w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/25113428/VIXY_2023-07-25_17-34-10_d3bd7-1536x1168.png 1536w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/07/25113428/VIXY_2023-07-25_17-34-10_d3bd7.png 1626w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
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Photo: <a href="https://www.flickr.com/photos/imfphoto/" target="_blank" rel="noreferrer noopener">International Monetary Fund</a> on Flickr and Shutterstock

Will Jerome Powell Be Hawkish Or Dovish? How These 5 ETFs Could React To The Fed's Rate Decision Wednesday

A top Wall Street analyst has issued a cautionary note, warning of a potential sharp reversal in the stock market during the <a href="https://www.benzinga.com/news/earnings/23/06/33001575/market-volatility-increases-s-p-500-snaps-5-week-winning-streak" target="_blank" rel="noreferrer noopener">second half of 2023</a>. 
According to Michael Wilson, Morgan Stanley&#8217;s chief U.S. equity strategist and chief investment officer, the market&#8217;s headwinds presently outweigh its tailwinds, indicating a significant likelihood of a severe correction. Wilson&#8217;s estimate implies that the S&amp;P 500 Index, tracked by the SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) may see a 10% drop in the second half of the year, with a target level of 3,900. 
<h2 class="wp-block-heading">Why Is Morgan Stanley Near-Term Bearish On The Stock Market?</h2>
&#8220;A 20% rally does not guarantee [the] bear market is over,&#8221; Wilson wrote in his latest presentation. 
The analyst drew on the historical parallel of the period immediately following World War II, between 1946 and 1949, when the S&amp;P 500 made a double bottom after rallying 24% from the first low.
Chart: S&amp;P 500 Index Price Action 1945-1949
<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="737" src="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/06/26102358/SPX_2023-06-26_16-23-05_e3589-1024x737.png" alt="" class="wp-image-57923" srcset="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/06/26102358/SPX_2023-06-26_16-23-05_e3589-1024x737.png 1024w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/06/26102358/SPX_2023-06-26_16-23-05_e3589-300x216.png 300w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/06/26102358/SPX_2023-06-26_16-23-05_e3589-768x553.png 768w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/06/26102358/SPX_2023-06-26_16-23-05_e3589-1536x1106.png 1536w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/06/26102358/SPX_2023-06-26_16-23-05_e3589.png 1708w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>
This pessimistic outlook stems from Morgan Stanley&#8217;s lower-than-expected earnings forecast for the year, which anticipates pricing erosion and disappointing top-line performance. 
&#8220;The Equity risk premium is at very unattractive levels, particularly given our earnings outlook,&#8221; Wilson said. The expert highlighted that stocks are trading in a &#8220;high risk zone,&#8221; susceptible to a sharp rise in the equity risk premium.
<h2 class="wp-block-heading">Headwinds From Restrictive Monetary and Fiscal Policies</h2>
Furthermore, Morgan Stanley noted that the United States&#8217; economic policies are turning more restrictive, putting additional pressure on equities. 
The liquidity environment is rapidly deteriorating, owing to record levels of Treasury issuance and quantitative tightening. Morgan Stanley predicts that bank reserves will shrink by $500-800 billion over the next six months, potentially lowering equity valuations. Wilson noted that the money supply growth is at the lowest levels since the 1930s.
Read Also: <a href="https://www.benzinga.com/government/23/06/32971034/jerome-powell-big-us-banks-could-see-20-increase-in-capital-requirements-2-more-interest-rate-hikes" target="_blank" rel="noreferrer noopener">Jerome Powell: Big US Banks Could See 20% Increase In Capital Requirements, 2 More Interest Rate Hikes Could Come In 2023</a>
Fiscal support is expected to peak and reverse next month, potentially creating a headwind of 6 percentage points to nominal GDP over the next year.
The outlook is more optimistic for 2024, as Wilson expects another earnings boom following a &#8220;proper bust&#8221; in 2023. 
<h2 class="wp-block-heading">Alternative Scenario? The Average Stock Will Fare Better, Value Will Stage A Comeback</h2>
Wilson also made recommendations for an alternative scenario. 
Should his earnings forecast be incorrect, he expects market breadth to improve, with the equal-weighted S&amp;P 500, as tracked by the Invesco S&amp;P 500 Equal Weight ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RSP#NYSE">RSP</a>), outperforming the market-cap weighted S&amp;P 500. 
The average stock is expected to fare relatively better both in a more optimistic and more pessimistic scenario, either by rising more or declining less. 
Furthermore, Morgan Stanley believes that value stocks, as tracked by the Ishares Russell 1000 Value ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IWD#NYSE">IWD</a>), may outperform growth stocks, which are tracked by the Ishares Russell 1000 growth ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IWF#NYSE">IWF</a>) as defensive sectors regain their previous year&#8217;s leadership.
Now Read: <a href="https://www.benzinga.com/news/23/06/32996680/elon-musks-biographer-says-billionaires-difficult-childhood-unleashes-a-demon-mode-that-makes-him-a">Elon Musk&#8217;s Biographer Says Billionaire&#8217;s Difficult Childhood Unleashes A &#8216;Demon Mode&#8217; That Makes Him A Tough Leader</a>
Chart: Year-to-date returns of S&amp;P 500 (market-weighted and equal-weighted), Value and Growth Stocks
<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="737" src="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/06/26103103/IWF_2023-06-26_16-30-25_bd457-1024x737.png" alt="" class="wp-image-57929" srcset="https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/06/26103103/IWF_2023-06-26_16-30-25_bd457-1024x737.png 1024w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/06/26103103/IWF_2023-06-26_16-30-25_bd457-300x216.png 300w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/06/26103103/IWF_2023-06-26_16-30-25_bd457-768x553.png 768w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/06/26103103/IWF_2023-06-26_16-30-25_bd457-1536x1106.png 1536w,https://s3.amazonaws.com/editorial.benzinga.com/wp-content/uploads/2023/06/26103103/IWF_2023-06-26_16-30-25_bd457.png 1708w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>

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Price Target

Trading Ideas

Rydex ETF Trust Rydex S&P Equal Weight ETF

Top Wall Street Analyst Warns Of 'Proper Bust' In 2023: Stocks Are Trading In 'High Risk Zone'

The surge of artificial intelligence (AI),&nbsp;the supremacy&nbsp;of the internet giants and expectations of the Fed&#39;s tightening cycle nearing its end are propelling growth companies <a href="https://www.benzinga.com/money/best-value-stocks" target="_blank">to outperform value stocks</a>.
The<a href="https://www.benzinga.com/money/best-growth-stocks" target="_blank"> growth equity style</a> has made a remarkable recovery in the first five months of 2023, after experiencing a setback in 2022 due to aggressive interest rate hikes that impacted tech and other overvalued sectors.
The Vanguard Growth ETF&nbsp;(ARCA: VUG) has outperformed the Vanguard Value ETF (ARCA: VTV) by a remarkable 29% so far this year. While the growth-oriented ETF has risen 26%, the value-oriented ETF has struggled, registering a 3% decline year to date.&nbsp;
Only a month&nbsp;ago, the <a href="https://www.benzinga.com/etfs/sector-etfs/23/05/32397681/us-value-stocks-trail-growth-stocks-by-an-alarming-8-in-2023-why-is-the-value-style-underperform" target="_blank">performance gap between growth and value was about 8%</a>, which can offer an idea of how rapidly growth-related companies have surged&nbsp;in recent weeks.
<h3>Growth vs. Value in 2023</h3>
<img alt="" src="https://www.benzinga.com/files/u1363475/vtv_2023-06-01_17-33-26_b1a6b.png" style="height:500px; width:100%" />
<h3>Value&#39;s 2022 Outperformance vs. Growth: Wiped Out in 5 Months</h3>
The roughly 50% gain that value stocks had over growth in 2022 was almost entirely wiped out by the growth&#39;s outperformance in the just&nbsp;five months of 2023.
Since the Great Financial Crisis, the consistent outperformance of growth&nbsp;versus value stocks has been a recurrent trend in the U.S.&nbsp;stock market. This tendency has been supported by a protracted period of very low interest rates, which has pushed up valuations&nbsp;in the technology and growth sectors while depressing stocks&nbsp;in&nbsp;value-related sectors.
The year 2022 looked to suggest a potential reversal of this pattern, with energy stocks rising sharply and technology-related stocks falling precipitously. However, this reversal was short-lived, as growth stocks reasserted their dominance in 2023, supported by a robust surge in AI and tech stocks.
Chart: 15 Years Of Value Vs Growth
<img alt="" src="https://www.benzinga.com/files/u1363475/vtv_vug_2023-06-01_17-50-30_d21d4.png" style="height:500px; width:100%" />
<h3>Stock Movers: Gainers And Losers</h3>
About 70% of the Vanguard Growth ETF&#39;s year-to-date performance can be attributed to seven stocks: Apple, Inc. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/aapl#NASDAQ">AAPL</a>) added 4.7 percentage points (ppt) to the overall performance
<ul>
<li>Microsoft Corp. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/msf#NASDAQ">MSF</a>) 4.2ppt</li>
<li>NVIDIA Corp. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/nvda#NASDAQ">NVDA</a>)&nbsp;2.7ppt</li>
<li>Alphabet Inc. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/goog#NASDAQ">GOOG</a>) (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/googl#NASDAQ">GOOGL</a>) 2.2ppt</li>
<li>Amazon Inc. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/amzn#NASDAQ">AMZN</a>) 1.9ppt</li>
<li>Tesla Inc. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/tsla#NASDAQ">TSLA</a>) 1.2ppt</li>
<li>Meta Platforms Inc. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/meta#NASDAQ">META</a>) 1ppt.</li>
</ul>
The Vanguard Value ETF saw negative contributions from financials, health care and energy sectors with First Republic Bank, Pfizer Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/pfe#NYSE">PFE</a>), Johson &amp; Johnson (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/jnj#NYSE">JNJ</a>),&nbsp;Charles Schwab Corp. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/schw#NYSE">SCHW</a>), Chevron Corp. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/cvx#NYSE">CVX</a>) and Bank of America (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/bac#NYSE">BAC</a>)&nbsp;being the worst contributors to the performance.
Image: Shutterstock

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AI, Tech Fuel Rebound Of Vanguard Growth ETF, Eroding Value's 2022 Outperformance

During Thursday&#39;s broadcast of Benzinga&#39;s <a href="https://www.benzinga.com/premarket-prep/" target="_blank">&quot;PreMarket Prep&quot;</a>&nbsp;show,&nbsp;Christian Fromhertz, CEO of Tribeca Trading Group,&nbsp;said &quot;this is a day trader&#39;s market right now&quot;&nbsp;given the exceptional volatility seen in the last week.&nbsp;
Fromhertz On Market Landscape: <a href="https://www.benzinga.com/m-a/23/03/31385666/first-republic-rallies-as-major-us-banks-pledge-assistance-to-calm-markets">The banking crisis</a> will take some time to resolve, which might imply that policy overtightening&nbsp;by central banks could&nbsp;have reached its peak, Fromhertz said.&nbsp;
We are moving from an inflationary to&nbsp;deflationary environment, and this may be an attractive background for growth and tech companies, he said.&nbsp;
Recent price declines in oil crude and copper &mdash; two cyclical commodities tied to the health of the economy &mdash; essentially reflect a demand drop, which is what the central bank aimed for, the Tribeca Trading CEO said.&nbsp;
&quot;As all these things settle down, we start to see the light at the end of the tunnel,&quot; he said.&quot; &quot;Take what the market is giving you, which are day trading opportunities.&quot;
Fromhertz said he maintains his bullish stance on the semiconductor industry, which he said&nbsp;may be bought on dips.
The iShares Semiconductor ETF (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/soxx#NASDAQ">SOXX</a>) has surged 3% over&nbsp;the last week and is now up 22% year-to-date.
<img alt="" src="https://www.benzinga.com/files/u1363475/soxx_2023-03-16_18-46-35_979b4.png" style="height:573px; width:760px" />Chart: TradingView
<h3>Growth Stocks Outperform Value In 2023</h3>
From the start of the year, growth stocks, as tracked by the iShares Russell 1000 Growth ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/iwf#NYSE">IWF</a>), have outpaced value equities, as tracked by the iShares Russell 1000 Value ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/iwd#NYSE">IWD</a>), by 12%.
After being battered by the inflation-rate rise story in 2022, the IWF/IWD ratio, which reflects the relative strength of growth against value stocks, is practically flat from a year ago.
<img alt="" src="https://www.benzinga.com/files/u1363475/iwf_iwd_2023-03-16_18-44-51_ff180.png" style="height:573px; width:760px" />Growth vs. Value: Chart via TradingView.
Watch Thursday&#39;s &quot;PreMarket Prep&quot; episode here:
<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" frameborder="0" height="315" src="https://www.youtube.com/embed/IbVfmsFhxhE" width="560"></iframe>
Photo via Shutterstock.

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iShares PHLX SOX Semiconductor Sector Index Fund

SOXX

It's A Day Trader's Market: Christian Fromhertz Talks Volatility On 'PreMarket Prep'

iShares Russell 1000 Growth ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IWF#NYSE">IWF</a>) shares experienced unusual options activity on Tuesday. The stock price moved down to $282.53 following the option alert. 
<ul>
<li>Sentiment: BULLISH</li>
<li>Option Type: SWEEP</li>
<li>Trade Type: CALL</li>
<li>Expiration Date: 2021-09-17</li>
<li>Strike Price: $280.00</li>
<li>Volume: 1001</li>
<li>Open Interest: 31</li>
</ul>
<h2>Three Indications Of Unusual Options Activity</h2>
Exceptionally large volume (compared to historical averages) is one reason for which options market activity can be considered unusual. The volume of options activity refers to the number of contracts traded over a given time period. Open interest is the number of unsettled contracts that have been traded but not yet closed by either counterparty. In other words, open interest represents the quantity of contracts that individual parties have written but not yet found a counterparty for (i.e. a buyer finding a seller, or a seller finding a buyer).
Another sign of unusual activity is the trading of a contract with an expiration date in the distant future. Usually, additional time until a contract expires allows more opportunity for it to reach its strike price and grow its time value. Time value is important to consider because it represents the difference between the strike price and the value of the underlying asset. 
Contracts that are "out of the money" are also indicative of unusual options activity. "Out of the money" contracts occur when the underlying price is under the strike price on a call option, or above the strike price on a put option. These trades are made with the expectation that the value of the underlying asset is going to change dramatically in the future, and buyers and sellers will benefit from a greater profit margin. 
<h2>Understanding Sentiment</h2>
Options are "bullish" when a call is purchased at/near ask price or a put is sold at/near bid price. Options are "bearish" when a call is sold at/near bid price or a put is bought at/near ask price. 
Although the activity is suggestive of these strategies, these observations are made without knowing the investor's true intentions when purchasing these options contracts. An observer cannot be sure if the bettor is playing the contract outright or if they're hedging a large underlying position in a common stock. For the latter case, the exposure a large investor has on their short position in common stock may be more meaningful than bullish options activity. 
<h2>Trading Options With These Strategies</h2>
Unusual options activity is an advantageous strategy that may greatly reward an investor if they are highly skilled, but for the less experienced trader, it should remain as another tool to make an educated investment decision while taking other observations into account.
For more information to understand options alerts, visit <a href="https://pro.benzinga.help/en/articles/1769505-how-do-i-understand-options-alerts" title="https://pro.benzinga.help/en/articles/1769505-how-do-i-understand-options-alerts">https://pro.benzinga.help/en/articles/1769505-how-do-i-understand-options-alerts</a>

Understanding iShares Russell 1000 Growth ETF's Unusual Options Activity

Growth stocks and the related exchange traded funds took their lumps in May, but year to date, the iShares Russell 1000 Growth ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/iwf#NYSE">IWF</a>) is higher by 18.40 percent, an advantage of 530 basis points over the iShares Russell 1000 Value ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/iwd#NYSE">IWD</a>).
IWF is beating the iShares Russell 1000 ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/iwb#NYSE">IWB</a>) by 270 basis points.
<h3>What To Know</h3>
Growth stocks, including those residing in ETFs like IWF, usually command higher multiples than value equivalents or the broader market. Hence, the growth designation. Those premiums are usually persistent, but growth&#39;s outperformance of value is lengthy by historical standards, though some of that outperformance is attributable to growth often topping value following recessions.
&ldquo;Growth&rsquo;s recent out-performance conforms to the post-crisis norm,&rdquo; <a href="https://www.blackrockblog.com/2019/06/07/growth-premium-steady/">said BlackRock in a recent note</a>. &ldquo;Focusing on price returns, since 2010 growth has outperformed value by an average of approximately 350 bps a year. The outperformance has not only been meaningful, it has been consistent. During the past five years value has only outperformed meaningfully on one occasion, 2016.&rdquo;
Over the past three years, IWF is up 58.10 percent while IWD, the value ETF, is higher by 29.90 percent.
<h3>Why It&#39;s Important</h3>
As is often discussed with growth ETFs, the technology sector is a prime determinant of the growth factor&#39;s returns. IWF allocates over a third of its weight to technology stocks compared to 21.45 percent in the Russell 1000 Index.
&ldquo;As others have noted, a large part of growth&rsquo;s winning streak can be attributed to stellar earnings growth, particularly from technology companies,&rdquo; said BlackRock. &ldquo;That said, multiple expansion, i.e. paying more for a dollar of earnings, has played a part as well. Since the 2011 market bottom, the trailing price-to-earnings (P/E) ratio for the Russell 1000 Growth Index is up roughly 65%. In contrast, the value index&rsquo;s P/E ratio has expanded by a more modest 40%.&rdquo;
With the overweight in technology stocks, IWF&#39;s annualized volatility over the past three years was 14.40 percent, but that was just 180 basis points higher than the same metric on the Russell 1000 Index.
<h3>What&#39;s Next</h3>
For growth investors or those considering IWF, the good news is, on valuation, growth is not expensive relative to historical norms. It simply looks pricey relative to value because value is trading well below its usual multiples.
&ldquo;But while growth stocks are not particularly cheap, it is not obvious that they are expensive,&rdquo; said BlackRock. &ldquo;Valuations are slightly below the long-term average. In other words, the fact that growth looks stretched relative to value is not a function of growth being particularly rich but value being very cheap.&rdquo;
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<a href="https://www.benzinga.com/general/biotech/19/06/13879145/its-time-to-consider-leveraged-healthcare-etfs">Leveraged Healthcare ETFs Look Good</a>
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Long Ideas

Growth ETFs Can Keep Commanding Premiums Over Value

Domestic equities continue reminding investors that rising interest rates do not have to be punitive for equities. Last week, the Federal Reserve <a href="https://www.benzinga.com/analyst-ratings/analyst-color/18/09/12412680/the-federal-reserve-as-expected-issues-third-rate-hike-">raised rates for the third time this year</a>. The S&amp;P 500 surged Monday, extending its year-to-date gain to over 9 percent.
That statistic indicates broad-based strength for equities amid this year&#39;s Fed tightening, but there are pockets of superior performances.
<h3>What Happened</h3>
As has been widely documented, small caps are outperforming their large-cap rivals this year. The iShares Russell 2000 ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/iwm#NYSE">IWM</a>), the largest exchange traded fund dedicated to domestic small caps, entered Monday with a year-to-date gain of 11.51 percent, well ahead of the S&amp;P 500 and the Russell 1000 Index.
Historical data suggest this year&#39;s small-cap surge is not unusual when rates rise. Actually, smaller stocks often perform well as the Fed tightens. Looking at annualized performances of various benchmarks during Fed tightening cycles from 1993 through 2016, the small-cap Russell 2000 Index delivered annualized returns of around 22 percent, <a href="https://www.ftserussell.com/blog/index-idea-stocks-have-done-well-periods-rising-rates">according to FTSE Russell data</a>.
<h3>Why It&#39;s Important</h3>
Small-cap stocks performing well as rates climb indicate investors have some appetite for risk during tightening cycles. Growth stocks and the related ETFs confirm as much. The iShares Russell 1000 Growth ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/iwf#NYSE">IWF</a>) entered Monday with a year-to-date gain of almost 17 percent.
As is the case with smaller stocks, it&#39;s not unusual to see growth names outperform as rates rise. Looking at Fed tightening cycles from 1993 through 2016, the Russell 1000 Growth Index, IWF&#39;s underlying index, delivered average annualized returns of 20 percent, according to FTSE Russell data.
IWF holds over 540 stocks and allocates about 60 percent of its weight to the technology and consumer discretionary sectors, groups that are usually hallmarks of growth funds.
<h3>What&#39;s Next</h3>
&ldquo;Not surprisingly, economically sensitive equity asset classes like small caps have fared best, with the Russell 2000 Index generating a healthy 22.2% annualized return while the Russell 1000 Growth Index has also chalked up an impressive 20.1% annualized return,&rdquo; said FTSE Russell Managing Director Alec Young <a href="https://www.ftserussell.com/blog/index-idea-stocks-have-done-well-periods-rising-rates">in a note out Monday</a>.
&ldquo;Not surprisingly, bonds have not fared as well during periods of rising rates with the 10-year Treasury note losing an annualized 5.8% and investment grade corporate bonds gaining only slightly. However, given their significant exposure to the health of corporate credit, which tends to improve as the economy expands, corporate bonds have fared well posting 15% gains&rdquo;
Related Links:
<a href="https://www.benzinga.com/trading-ideas/long-ideas/18/10/12430080/best-sector-etfs-for-october-3-stocks-really-matter#/null">Best Sector ETFs For October</a> 
<a href="https://www.benzinga.com/analyst-ratings/analyst-color/18/10/12430079/investigate-this-international-etf">An Intelligent International ETF</a>

Small Cap Analysis

These Stocks Do Well When Rates Rise

July was the first month in some time that large-cap value stocks outperformed their growth rivals. Growth fans may be apt to say some company-specific issues plagued growth stocks last month.
But with a small number of stocks accounting for significant portions of widely followed growth indexes, such as the Russell 1000 Growth Index, there&#39;s some credibility to the aforementioned argument.
<h3>What To Know</h3>
When it comes stocks dominating growth benchmarks, that often means Facebook Inc. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/fb#NASDAQ">FB</a>), Amazon.com Inc. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/amzn#NASDAQ">AMZN</a>), Apple Inc. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/aapl#NASDAQ">AAPL</a>), Netflix, Inc. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/nflx#NASDAQ">NFLX</a>) and Google parent Alphabet Inc. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/googl#NASDAQ">GOOGL</a>), also known as the FAANG quintet.
The iShares Russell 1000 Growth ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/iwf#NYSE">IWF</a>) is one of the exchange traded funds that tracks the Russell 1000 Growth Index. As of Aug. 9, four of the five FAANG stocks were among IWF&#39;s top 10 holdings with Netflix being the exception, but that stock is part of IWF&#39;s roster.
Combined, IWF&#39;s FAANG exposure as of Aug. 9 was 22.1&nbsp;percent.
<h3>Why It&#39;s Important</h3>
&ldquo;US large cap growth stocks have outperformed their value counterparts in the last year, with a slight pullback in July,&rdquo; <a href="http://www.ftserussell.com/blog/index-idea-growth-versus-value-performance-has-hinged-faangs">said FTSE Russell</a>. &ldquo;This parallels how FAANG stocks have performed relative to the broad Russell 1000 large cap equity index for the same time period.&rdquo;
The iShares Russell 1000 Value ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/iwd#NYSE">IWD</a>), which tracks the Russell 1000 Index, has no FAANG exposure. IWD allocates 18 percent of its combined weight to the technology and consumer discretionary sectors, groups that are usually cornerstones of growth funds. IWF, the growth ETF, devotes about <a href="https://www.ishares.com/us/products/239706/ishares-russell-1000-growth-etf">59.4 percent of its roster</a> to those sectors.
<h3>What&#39;s Next</h3>
For traditional growth ETFs, like IWF, what comes next largely revolves around price action in the FAANGs.
&ldquo;While the Russell 1000 Growth Index&rsquo;s 12.8% YTD total return still soundly leads the Russell 1000 Value&rsquo;s 2.7% gain[1], growth&rsquo;s leadership stalled recently as FAANG stocks leadership eased,&rdquo; said FTSE Russell Managing Director Alect Young.
Young highlighted the aforementioned sector differences as integral to explaining the diverging performances between the growth and value indexes. Barring a significant turn in value stocks, IWD is poised to trail IWF yet again this year.
Related Links:
<a href="https://www.benzinga.com/trading-ideas/long-ideas/18/08/12180685/bank-on-this-bank-etf">Look At This Bank ETF</a>
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NFLX

No Surprise: FAANG's A Big Deal For Growth Indexes, ETFs

&quot;The key to making money in stocks is not to get scared out of them.&quot; -Peter Lynch
The term investing refers to risking one&#39;s capital with the hope of generating future returns. Not everyone commits their capital with the same objective, which often varies with age, risk tolerance, personal needs, the time period, investable surplus and even temperament.
It is only by adopting a carefully thought-out strategy that an investor can generate maximum returns while assuming minimum risk.
Fundamentally, investing approaches can be categorized into growth and value investing. Let&#39;s delve&nbsp;into these two approaches by looking at what each means, the pros and cons associated with each&nbsp;and how one compares against the other.
<h3>Value Investing: Hunting Bargains</h3>
<a href="https://www.benzinga.com/investing/guide-to-value-investing/">Value investing </a> is an approach where an investor roots for an underperforming stock in which they see&nbsp;future appreciation potential.
The late Benjamin Graham, who is known as one of the fathers of value investing along with David Dodd, put forth a concept called intrinsic value, which is justified by a company&#39;s assets, earnings, dividends and financial strength.
Intrinsic value&nbsp;is the perceived value of a company calculated using fundamental analysis by taking into account all tangible and intangible factors,<a href="https://www.investopedia.com/terms/i/intrinsicvalue.asp">&nbsp;according to Investopedia</a>.
In simple terms, value investing is a strategy of investing in stocks that trade at less than their intrinsic value or those which trade at a discounted valuation.
See Also: <a href="https://www.benzinga.com/investing/guide-to-value-investing/">A Guide To Value Investing</a>
Altria Group Inc (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/mo#NYSE">MO</a>), with a trailing-twelve month P/E of 10.39, can be described as a value stock. The stock is trading down about 16 percent year-to-date as of July 31.
Value investors typically look for a margin of safety&nbsp;and therefore pick stocks trading at a bigger discount than the intrinsic value provides.
Graham&#39;s logic for the intrinsic value focus is that it will keep investors from being swayed by extreme emotions running through the markets.
The following are the criteria that were outlined by Graham for screening value stocks:
<ul>
<li>Companies with atings (based on S&amp;P) of B+ or better.</li>
<li>Total debt to current asset ratio of less than 1.1.</li>
<li>Current ratio of over 1.5.</li>
<li>Positive earnings growth during the past five years.</li>
<li>Price/earnings ratio of 9 or less.&nbsp;</li>
<li>Price/book value of less than 1.2.</li>
<li>Dividend-paying companies.</li>
</ul>
How Intrinsic Value Is Calculated
<ul>
<li>
The discounted cash flow method, which discounts all expected future cash flows at an appropriate&nbsp;rate to arrive at the net present value.
</li>
<li>Multiples valuation, which takes the trailing 12-month EPS multiplied by expected P/E, or EBITDA multiplied by current EV/EBITDA ratio, or sales multiplied by the P/sales ratio.</li>
<li>The dividend discount model, which discounts&nbsp;back all the future dividend payments of a company.</li>
</ul>
<h3>Growth Investing: Betting On The Future</h3>
Growth investing, as the name implies, lends a growth focus, as investors scout&nbsp;high-growth companies that generate above-average growth relative to the industry in which they operate. This approach doesn&#39;t shun expensive stocks&nbsp;and recommends buying them if they&nbsp;have superlative growth potential.
The accent here is on the equity with the highest growth potential, rather than on valuation metrics that delineate&nbsp;a stock as cheap or expensive.
Amazon.com, Inc. (NASDAQ: <a class="ticker" href="https://www.benzinga.com/stock/amzn#NASDAQ">AMZN</a>), which went public in 1997 at $18 per share, is now close to $1,800 over a 20-year period. This represents an appreciation of about 10,000 percent.
<img alt="amzn.png" src="/files/u101977/amzn.png" style="height:286px; width:800px" />
Although <a href="https://www.benzinga.com/analyst-ratings/analyst-color/18/07/12089661/amazons-q2-was-a-show-of-power-morgan-stanley-says"> Amazon&#39;s </a> valuation is astronomical, it is still considered a growth stock given the attractive opportunity presented by e-commerce and the cloud. Amazon Web Services has been generating revenue growth at a year-over-year clip of 40-plus&nbsp;percent.
The company&#39;s subscription services, which comprise annual and monthly fees associated with Amazon Prime membership &mdash;&nbsp;as well as audiobook, e-book, digital video, digital music&nbsp;and other non-AWS subscription services &mdash; also offer&nbsp;high growth potential. Excluding forex, subscription services clocked in revenue growth of 55 percent in the most recent quarter.
See Also: <a href=" https://www.benzinga.com/analyst-ratings/analyst-color/18/07/12091149/which-is-the-better-buy-netflix-or-chinas-fast-growing-">Which Is The Better Buy: Netflix Or China&#39;s Fast-Growing Iqiyi?</a>
Screening Growth Stocks
Several criteria exist for selecting a growth stock, and some basic screening criteria are listed below:
<ul>
<li>Zero in on a sector showing sustainable growth; tech stocks usually qualify.</li>
<li>Look for industries and sectors with&nbsp;high barriers to entry.</li>
<li>Consistently rising sales.</li>
<li>Strong historical earnings growth: over 15-percent growth over the past three years.</li>
<li>Earnings growth outperforming the market as a whole.</li>
<li>Robust profit margins.</li>
<li>Improving return on equity.</li>
<li>Strong stock performance.</li>
</ul>
<h3>Growth Vs. Value Investing</h3>
The growth vs. value debate has been raging on for some time now, although there hasn&#39;t been a clear verdict in favor of either of the investment themes.
Value stocks outperformed growth stocks over a 90-year period beginning in 1926 by 17 percent to 12.6 percent, <a href="https://www.fool.com/investing/2016/06/19/growth-stocks-vs-value-stocks-over-the-long-term-y.aspx">The Motley Fool quoted</a> Bank of America Merrill Lynch Chief Investment Strategist Michael Hartnett as saying. Value stocks outperformed growth stocks in about three out of every five years, he said.
Yet growth stocks have outperformed value stocks in most years since 2006.
<img alt="306651_cyclicality.png" src="/files/u101977/306651_cyclicality.png" style="height:474px; width:750px" />
The success of either of these strategies is contingent on certain factors such as the stage of the economic cycle, the interest rate environment, credit costs and market cycles.&nbsp;
Growth stocks do well when economic growth is decelerating, as investors seek out high-growth companies with predictable earnings streams.
On the contrary, value stocks tend to outperform when the economy is growing.
Value stocks are generally thought to be a better bet in a rising interest rate environment. &quot;Value stocks have outperformed in 14 of the last 17 rate-tightening periods,&quot; <a href="https://www.cnbc.com/2015/12/09/bet-on-value-stocks-in-2016-as-interest-rates-rise-traders.html">CNBC</a> quoted Patrick O&#39;Shaughnessy of O&#39;Shaughnessy Asset Management as saying.
Value stocks have strong existing cash flows, and the cash flow certainty drives investors toward them when interest rates rise. Growth stocks are valued on future earnings, making investors skeptical of their investment worthiness in a rising rate environment.
A bullish market is supportive of growth stocks, while value stocks fare better in a bearish market&nbsp;as risk averse investors flock to bargains.
See Also: <a href="https://www.benzinga.com/investing/best-long-term-investments/">Best Long-Term Investments</a>
<h3>Relative 1-Year Performance Of Growth Vs. Value Stocks</h3>
The iShares Russell 1000 Index (ETF) (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/iwb#NYSE">IWB</a>) has gained about 9.1 percent over the past year compared to the 18.4-percent advance by the iShares Russell 1000 Growth Index (ETF) (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/iwf#NYSE">IWF</a>).
This has been the story over the past decade, with growth stocks outperforming their value counterparts, marking one of the longest periods of outperformance by growth stocks.
This dynamic could change going forward, if <a href="https://www.marketwatch.com/story/the-stock-market-just-experienced-the-most-seismic-shift-from-growth-to-value-since-lehman-brothers-says-nomura-2018-07-31"> comments </a> by Charlie McElligott, head of cross-asset strategy at Nomura, are to be believed.
The three-day move in&nbsp;U.S. value/growth suggest&nbsp;the market may be rotating out of growth stocks and into value stocks in a big way &mdash;&nbsp;the biggest since the rotation that happened after the collapse of Lehman in September&nbsp;2008, McElligott was quoted as saying by MarketWatch.
<h3>Final Thoughts</h3>
Since both value and growth investing have their own merits and demerits, investors should look to include both value and growth stocks in their portfolio, as such a strategy will help generate returns irrespective of how the factors impacting the two investment styles pan out.

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What Is Growth Investing And Value Investing?

Index provider FTSE Russell finalizes its annual index reconstitution today, making for brisk trading activity as well as some changes for some well-known exchange traded funds.
Each year on the final Friday of June, &ldquo;stocks are added or deleted to the Russell 1000 large cap and Russell 2000 small cap, prompting fund managers to adjust their portfolios to reflect new weightings,&rdquo; <a href="https://www.reuters.com/article/us-usa-stocks-russell/tech-healthcare-to-get-bumped-up-in-russell-index-remake-idUSKBN1JH32B">reports Reuters</a>.
<h3>What Happened</h3>
The iShares Russell 2000 ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/iwm#NYSE">IWM</a>), the largest small-cap ETF, tracks the aforementioned Russell 2000 Index. As of June 20, the technology and health care sectors combined for nearly <a href="https://www.ishares.com/us/products/239710/?referrer=tickerSearch">35 percent of IWM&#39;s weight</a>, representing two of the ETF&#39;s top three sector allocations.
That could change because small-cap health care and technology stocks have been primary drivers of this year&#39;s small-cap resurgence, one that has seen IWM gain about 12 percent.
<h3>Why It&#39;s Important</h3>
Stocks graduating from the Russell 2000 Index could find their way to the Russell 1000 Index, which is tracked by the iShares Russell 1000 ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/iwb#NYSE">IWB</a>). IWB is already heavy on technology and health care names with those sectors representing 25.61 percent and 13.38 percent, respectively, of the fund&#39;s weight.
The iShares Russell 1000 Value ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/iwd#NYSE">IWD</a>) devotes 14.51 percent of its weight to health care stocks and 9.25 percent to technology names.
As a growth ETF, it&#39;s not surprising the iShares Russell 1000 Growth ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/iwf#NYSE">IWF</a>) has a substantial tech weight at 40.12 percent. IWF&#39;s health care allocation is 12.44 percent.
The additions and deletions can sometimes add volatility to these funds, as TD Ameritrade Chief Market Strategist JJ Kinahan noted.
&ldquo;You may see somewhat odd movement in ETFs like IWN; it would be similar to what you should&rsquo;ve been aware of on an options expiration or last week with the quadruple witch,&quot; he said. &quot;You have large amounts of orders coming in and out, so it wouldn&rsquo;t surprise me if there was some added volatility.&rdquo;
<h3>What&#39;s Next</h3>
The Russell reconstitution promises to bring increased volume Friday.
&ldquo;Last year&rsquo;s reconstitution is estimated to have resulted in total turnover of $50 billion,&rdquo; according to Reuters. Estimates for this year range from $54 billion to $62 billion in increased volume thanks to the Russell reconstitution.
IWB and the small-cap IWM have a combined $70.24 billion in assets under management.
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Russell 1000 ETFs To Increase In Health Care, Tech Exposure

U.S. equities have been rallying lately on strong global growth and rising investor optimism. Moreover, positive earnings season and developments in President Donald Trump&#39;s tax reform have also contributed to the gains.

	The global economy is expected to witness growth of 3% through 2018, the Conference Board said in its November Global Economic Outlook 2018.

	Market Movers

	GDP growth for the United States was revised up to 3.3% in the third quarter compared with 3.1% in the previous quarter. The third quarter reading was revised from an initial reading of 3%. This was the strongest quarterly growth reading in three years.&nbsp;&nbsp; &nbsp;

	Moreover, energy stocks contributed to the rally, as Brent prices crossed the $65 mark for the first time since 2015 owing to news of a key North Sea pipeline shutdown. Moreover, United States oil inventories decreased 7.38 million barrels in the previous week, way above Bloomberg&#39;s expectations of a drop of 2.89 million barrels.

	Risks Involved

	Although the Senate passed the Republican tax reform, there are increased concerns about the differences in the versions of the House and Senate. A consensus has to be reached for the tax reform to become law. Although we witnessed sector rotation strategies initially in the wake of the Senate tax reform vote, because domestic companies are expected to benefit from the bill, uncertainty regarding the final version put a halt to that strategy (read: <a href="https://www.zacks.com/stock/news/285573/3-ETF-Areas-May-Come-Under-Pressure-on-Tax-Reform">3 ETF Areas May Come Under Pressure on Tax Reform</a>). &nbsp;

	Moreover, geopolitical risks weigh on the markets. Last month, North Korea launched a Hwasong-15 missile with improved technology that flew over Japan, per Korean Central News Agency (KCNA). Per United States Secretary of Defense James Mattis, this missile flew higher than all earlier missiles fired.

	Owing to large-cap companies&#39; high international exposure, strong global growth is expected to be a benefit for these companies. Moreover, owing to the high uncertainty in the markets, we believe it is best to opt for low volatility. Hence, we will now discuss a few ETFs focused on providing exposure to the large-cap growth space.

	PowerShares QQQ ETF QQQ

	This fund is a popular ETF that maintains a hefty exposure to U.S. tech companies and tracks the Nasdaq 100 index.

	It has AUM of $59.1 billion and charges a fee of 20 basis points a year. From a sector look, the fund has high exposures to Information Technology, Consumer Discretionary and Health Care with 60.5%, 21.2% and 10.3% allocation, respectively (as of Dec 11, 2017). The fund&#39;s top three holdings are Apple Inc AAPL, Microsoft Corporation MSFT and Amazon.com Inc AMZN with 12.2%, 9.0% and 7.7% allocation, respectively (as of Dec 11, 2017). The fund has returned 30.3% in a year and 31.4% year to date (as of Dec 12, 2017). It has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook.

	iShares Russell 1000 Growth ETF IWF

	This fund is a popular ETF targeting large-cap U.S. companies and tracks the Russell 1000 Growth Index.

	It has AUM of $40.1 billion and charges a fee of 20 basis points a year. From a sector look, the fund has high exposures to Information Technology, Consumer Discretionary and Health Care with 38.0%, 17.9% and 13.0% allocation, respectively (as of Dec 11, 2017). The fund&#39;s top three holdings are Apple Inc, Microsoft Corporation and Amazon.com Inc with 7.0%, 5.0% and 3.6% allocation, respectively (as of Oct Dec 11, 2017). The fund has returned 26.4% in a year and 28.0% year to date (as of Dec 12, 2017). It has a Zacks ETF Rank #1 (Strong Buy) with a Medium risk outlook.

	Vanguard Growth ETF VUG

	This fund is a popular ETF targeting large-cap U.S. companies and tracks the MSCI US Prime Market Growth Index.

	It has AUM of $31.3 billion and charges a fee of 6 basis points a year. From a sector look, the fund has high exposures to Information Technology, Consumer Services and Health Care with 27.9%, 19.6% and 13.2% allocation, respectively (as of Oct 31, 2017). The fund&#39;s top three holdings are Apple Inc, Alphabet Inc GOOGL and Amazon.com Inc with 7.3%, 5.7% and 4.2% allocation, respectively (as of Oct 31, 2017). The fund has returned 24.3% in a year and 25.9% year to date (as of Dec 12, 2017). It has a Zacks ETF Rank #1 with a Medium risk outlook.

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What Lies Ahead For Large-Cap Growth ETFs?

Wall Street is going gaga over the likely benefits of Trump&#39;s proposed tax reform (or reduction). Yet, there are some corners of the economy that are finding it tough to cheer. On Nov 2, House Republicans provided the layout for the biggest changes in the U.S. tax code in <a href="http://www.chicagotribune.com/news/nationworld/politics/ct-gop-tax-cut-plan-20171102-story.html">three decades</a>.
Below we highlight the likely winners and losers of the proposed Tax reform. The plan would reduce the corporate tax rate <a href="http://www.latimes.com/politics/la-na-pol-gop-tax-cuts-20171102-htmlstory.html">to 20% from 35%</a> and modify the individual rates from seven brackets to four (read<a href="https://www.zacks.com/stock/news/279566/gop-nears-tax-reform-buy-these-etfs">: GOP Nears Tax Reform: Buy These ETFs</a>).
<h3>
	Winners</h3>
Financial
As per an article published on CNBC, a senior analyst at AB Bernstein noted that &quot;large banks likely would see 2018 earnings per share <a href="https://www.cnbc.com/2017/10/04/wall-street-tallying-up-windfall-it-will-get-from-trump-tax-plan.html">jump by 12 to 20</a> percent, while midcaps would see growth of 15 to 25 percent.&quot; Compared with the other sectors, the gain from tax reforms for large-cap banks would be in the 4% to 12% range while small-caps would see a boost of 7% to 17%, according to the article published on CNBC. This brings funds like PowerShares KBW Regional Bank Portfolio KBWR in the spotlight. KBWR was up 0.8% on Nov 2 (read: <a href="https://www.zacks.com/stock/news/281525/powell-to-lead-fed-best-etf-strategies">Powell to Lead Fed: Best ETF Strategies</a>).
Large-Cap Growth
Most analysts say that big corporates will benefit from these tax cuts. First, a reduction from 35% to 20% and then &quot;more favorable treatment of income earned abroad, which is either not taxed or taxed at an <a href="https://www.vox.com/2017/11/2/16596896/house-republican-tax-reform-cuts-trump-ryan-explained">even lower rate than 20 percent</a>&quot; should prove great for large-cap growth ETFs like iShares Russell 1000 Growth ETF IWF. Notably, large-cap stocks have considerable foreign exposure and are thus beneficiaries of such bills. The fund IWF added about 0.1% on Nov 2.
<h3>
	Losers</h3>
Housing&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 
The new plan intends to rule out many prevalent deductions. The GOP-backed Tax Cuts and Jobs Act <a href="https://www.washingtonpost.com/news/business/wp/2017/11/02/housing-stocks-sink-as-gop-proposes-cut-to-mortgage-interest-deduction/?utm_term=.292b41c55690">would cut the mortgage interest tax deduction</a> for new home loans. &quot;Mortgage interest deductions would be limited to new loans of no more than $500,000, down from the current $1 million. Deductions for second homes would no longer be allowed. Property tax deductions <a href="http://www.latimes.com/politics/la-na-pol-gop-tax-cuts-20171102-htmlstory.html">would be capped at $10,000</a>,&quot; as per a source.
So far, Americans resorted to this popular tax break to lower the purchase cost of home. The change may push up already-higher housing prices. As result, housing ETFs like SPDR S&amp;P Homebuilders ETF XHB, iShares US Home Construction ETF ITB and PowerShares Dynamic Building &amp; Construction ETF PKB fell 2.5%, 0.9% and 1.5% on Nov 2, respectively.
Healthcare
The bill also eyes annulling of <a href="https://www.vox.com/policy-and-politics/2017/11/2/16595980/winners-losers-house-republican-tax-bill">medical expense deduction</a>. Under the existing law, individuals who expend <a href="http://www.businessinsider.in/The-GOPs-tax-plan-could-make-it-harder-to-get-tax-deductions-for-medical-expenses/articleshow/61467722.cms">more than 10% of their income</a> on medical expenses are permissible to subtract part of those costs from their taxes. But the proposed new bill would eliminate such deductions. Omitting the deduction will help Republicans with <a href="https://www.vox.com/policy-and-politics/2017/11/2/16595980/winners-losers-house-republican-tax-bill">about $10 billion</a>. Health Care Select Sector SPDR ETF XLV lost about 0.4% on Nov 2 (read: <a href="https://www.zacks.com/stock/news/279399/healthcare-etfs-head-to-head-xlv-vs-vht">Healthcare ETFs Head to Head: XLV vs. VHT</a>).
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Early Winners And Loser Of Trump's Tax Reform

There&rsquo;s no question about it &mdash; growth stocks have been the place to be during this bull market. However, according to LPL analyst Burt White, the growth trade may have finally run its course <a href="https://www.benzinga.com/analyst-ratings/analyst-color/17/06/9590211/goldman-compares-faamg-stocks-to-high-flyers-of-the-dot-">in 2017</a>.
In a new report, White looked at just how much growth stocks have outperformed value stocks in the past decade. Based on the Russell 3000 style indices, growth stocks have delivered a 50 percent higher overall return for investors than value stocks over the past 10 years.
That divergence has continued in 2017, with growth stocks delivering an 18 percent overall return compared to just a 4 percent return for value stocks.
White said the current bull market is the longest period of growth stock outperformance in history and investors should be looking to dial back exposure at this point. Instead, he believes value stocks could make <a href="https://www.cnbc.com/2017/06/12/growth-stocks-vs-value-stocks-why-value-is-finally-winning.html">a comeback </a>in the second half of the year.
While growth stocks almost always trade at a valuation premium to value stocks, White said growth stocks&rsquo; 34 percent forward PE premium is currently at its highest point in a decade and is well above its 15-year average of only 27 percent.
&ldquo;For those still overweight growth, even though growth is currently enjoying strong momentum, we suggest being on the lookout for opportunities to play a value rebound,&rdquo; he wrote.
White said the financial and energy sectors are the two best sectors for value at the moment, while information technology and consumer discretionary are the two key growth sectors.
Traders looking to play a potential rotation from growth to value should consider buying value ETFs such as the Guggenheim Invest S&amp;P 500 Pure Value ETF (NYSE: <a class="ticker" href="/stock/rpv#NYSE">RPV</a>) and selling growth ETFs such as the iShares Russell 1000 Growth Index (ETF) (NYSE: <a class="ticker" href="/stock/iwf#NYSE">IWF</a>).
Related Link: <a href="https://www.benzinga.com/analyst-ratings/analyst-color/17/05/9420260/warren-buffett-tells-value-investors-to-resist-the-tempt">Warren Buffett Tells Value Investors To Resist The Temptation To Speculate</a>

As Bull Market Ages, Should You Rotate From Growth To Value Stocks?

Despite all the consternation and controversy over the terminology, smart or strategic-beta exchange traded funds are one of the fastest-growing segments of the ETF industry.

	Strategic-beta ETFs, which funds employing various weighting methodologies from dividends to equal-weighting to factor-based funds, continue outpacing the ETF industry&#39;s already impressive growth. At the end of the second quarter, there were 844 strategic-beta ETFs, with collective assets under management of approximately $497 billion worldwide, according to <a href="http://www.morningstar.com/">Morningstar</a>.

	There is reason to believe the growth of strategic beta ETFs is still in the early innings because advisors and institutional are continuing to boost usage of such funds. According to FTSE Russell&rsquo;s first U.S. retail financial advisor market survey (<a href="http://www2.londonstockexchangegroup.com/advisor-smart-beta-survey">Smart Beta:</a> 2015 survey findings from U.S. financial advisors), 68 percent of financial advisors polled are using smart beta ETFs and 70 percent are using&nbsp;<a href="http:// http://www.benzinga.com/trading-ideas/long-ideas/15/09/5871033/the-survey-says-advisors-love-smart-beta-etfs">multiple strategic-beta approaches</a>.

	Related Link: <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/10/5879073/slicing-and-dicing-the-s-p-500-with-etfs">Slicing And Dicing The S&amp;P 500 With ETFs</a>

	Year-to-date, three of the top 10 asset-gathering ETFs are<a href="http://www.benzinga.com/trading-ideas/long-ideas/15/09/5867634/the-currency-hedged-etf-love-affair-continues"> currency-hedged funds</a>, a group that can be classified in the strategic-beta realm. Those ETFs are the WisdomTree Europe Hedged Equity Fund (NYSE: <a class="ticker" href="/stock/hedj#NYSE">HEDJ</a>), Deutsche X-trackers MSCI EAFE Hedged Equity ETF (NYSE: <a class="ticker" href="/stock/dbef#NYSE">DBEF</a>) and the WisdomTree Japan Hedged Equity Fund (NYSE: <a class="ticker" href="/stock/dxj#NYSE">DXJ</a>).

	&quot;As new products have continued to roll off asset managers&#39; assembly lines, their sales and marketing departments have been working tirelessly to position these new models within an increasingly competitive field. The result has been a ratcheting up of the level of complexity of the indexes that form the raw stuff of these benchmark-based investment products and, in some cases, a growing disparity between how they are pitched by their sponsors and the actual investment results they produce,&rdquo; notes <a href="http://news.morningstar.com/articlenet/article.aspx?id=716346">Morningstar</a>.

	Speaking of new, sophisticated ETFs, several of this year&#39;s most successful rookie ETFs are strategic-beta products, including the WisdomTree Europe Hedged SmallCap Equity Fund (NYSE: <a class="ticker" href="/stock/eusc#NYSE">EUSC</a>) and the PowerShares S&amp;P 500 ex-Rate Sensitive Low Volatility Portfolio (NYSE: <a class="ticker" href="/stock/xrlv#NYSE">XRLV</a>).

	A frequent criticism of strategic-beta ETFs is that these funds often sport higher fees than their traditional cap-weighted counterparts. While the average fee differential between a cap-weighted ETF and a strategic beta fund is not jaw-dropping, it adds up over time and there are plenty of examples of prosaic broad market ETFs with annual fees of 0.1 percent or less while it is not hard to find smart-beta products with annual expense ratios in the 0.7 percent (or higher) range.

	There is good news on the strategic-beta fee front. As Morningstar notes, increased competition in the space is likely to pressure fees and that is good for investors. It&#39;s already happening. On Wednesday, Goldman Sachs <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/09/5873462/goldman-sachs-heads-to-emerging-markets-with-new-etf#/null">introduced its second ETF</a> this month, the Goldman Sachs ActiveBeta&reg; Emerging Markets Equity ETF (NYSE: <a class="ticker" href="/stock/gem#NYSE">GEM</a>). That ETF is priced &ldquo;34 percent lower than the most liquid Emerging Market Equity ETF by volume, and more than 22 percent lower than the Morningstar Diversified Emerging Markets category Strategic Beta average,&rdquo; according to Goldman.

	Goldman&#39;s first ETF, also a strategic-beta offering, the Goldman Sachs ActiveBeta U.S. Large Cap Equity ETF (NYSE: <a class="ticker" href="/stock/gslc#NYSE">GSLC</a>), costs just 0.09 percent per year, putting it in direct fee competition with popular cap-weighted funds issued by Vanguard.

	&quot;An increasingly crowded and competitive landscape will also put pressure on fees. We have already seen instances of aggressive fee reductions for strategic-beta ETPs. We anticipate that cost-competition in this space will become more prominent in the years to come,&rdquo; said Morningstar.

	Home to a combined $51.1 billion in assets under management, the iShares Russell 1000 Growth ETF (NYSE: <a class="ticker" href="/stock/iwf#NYSE">IWF</a>) and the iShares Russell 1000 Value ETF (NYSE: <a class="ticker" href="/stock/iwd#NYSE">IWD</a>) are the two largest (and oldest) strategic beta ETFs trading in the US.

Eurozone

New ETFs

Emerging Market ETFs

Forex

DBEF

WisdomTree Trust Japan Total Dividend Fund

EUSC

GSLC

HEDJ

XRLV

Delving Deeper Into Strategic-Beta ETFs

It is safe to say plenty of folks know that Apple (NASDAQ: <a class="ticker" href="/stock/aapl#NASDAQ">AAPL</a>), the largest U.S. company by market value, is introducing a new iPhone today.

	Actually, it is possible that two new versions of the popular smartphone will be introduced to consumers. One is expected to be faster and have improved video display while the other will be more affordable for emerging markets consumers.

	What is good for Apple can often be good for a plethora of ETFs. Over four percent of Apple's market capitalization is <a href="http://www.etfchannel.com/etfs/?symbol=aapl">held by ETFs</a>, which means no product announcements by the company have the potential to impact a slew of funds.

	Related: <a href="http://www.benzinga.com/trading-ideas/long-ideas/13/09/3899315/etfs-look-to-break-post-iphone-blues">ETFs Look To Break Post-iPhone Blues</a>.

	S&amp;P Capital IQ "believes the company's fundamentals are strong, with room for double-digit revenue growth in FY 14 
	(Sep.) reflecting re-acceleration in iPhone and iPad revenues," said the research firm in a new note. "

	S&amp;P Capital IQ Analyst Scott Kessler "sees a potential partnership with China Mobile (NYSE: <a class="ticker" href="/stock/chl#NYSE">CHL</a>) expanding Apple's prospects in the world's largest smartphone market, anticipates iPad update news within a month or so, and believes sentiment related to the company's shares and dividend policy will continue to improve. While the shares are up more than 25% since late-June lows, Kessler remains positive and has 12-month target price of $550."

	S&amp;P Captial IQ has favorable views on several ETFs with Apple exposure, including the PowerShares QQQ (NASDAQ: <a class="ticker" href="/stock/qqq#NASDAQ">QQQ</a>). Also referred to as the NASDAQ-100 tracking ETF, QQQ has a 13.3 percent weight to Apple, one of the largest among ETFs. QQQ's weight to Apple is nearly 600 basis points more than what the fund allocates to Microsoft (NASDAQ: <a class="ticker" href="/stock/msft#NASDAQ">MSFT</a>), its second-largest holding. QQQ's Apple exposure is nearly double its weight to Google (NASDAQ: <a class="ticker" href="/stock/goog#NASDAQ">GOOG</a>), the ETF's third-largest holding.

	QQQ, which is the largest PowerShares by assets with $36.7 billion, is rated Overweight by S&amp;P Capital IQ.

	The Technology Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlk#NYSE">XLK</a>), the largest tech sector ETF by assets with $11.4 billion, also fits the bill as an "Apple ETF" with an almost 15.4 percent weight to the stock. That is almost double the weight XLK gives to Google. S&amp;P Capital IQ rates XLK Overweight, but the ETF has been <a href="http://www.benzinga.com/trading-ideas/long-ideas/13/09/3884764/an-interesting-year-for-tech-etfs">merely a middling performer</a> among the nine sector SPDR ETFs this year.

	"There are 66 equity ETFs that have a top-10 position in Apple, based on the latest holdings used by S&amp;P Capital IQ. Looking at just Overweight-ranked ETFs, there are 46 of them," according to S&amp;P Capital IQ.

	Other broad market ETFs that feature Apple among their top holdings include the iShares Russell 1000 Growth ETF (NYSE: <a class="ticker" href="/stock/iwf#NYSE">IWF</a>), WisdomTree LargeCap Dividend Fund (NYSE: <a class="ticker" href="/stock/dln#NYSE">DLN</a>) and the Vanguard Growth ETF (NYSE: <a class="ticker" href="/stock/vug#NYSE">VUG</a>). S&amp;P Capital IQ has Overweight ratings on all of those funds as well.

	For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

	Disclosure: Author does not own any of the securities mentioned here.

A Bullish View Of Apple ETFs

OLGAX

The Danger Zone Pick: 11/12/12

The slide in shares of Facebook (NASDAQ: <a class="ticker" href="/stock/fb#NASDAQ">FB</a>) since the social media firm's May IPO has irked plenty of folks. From investors to California tax collectors, Facebook's slide has been a depressing (and unfortunately) ongoing episode. 

The stock's dismal performance has also hampered its ability to find a home in more ETFs. For example, Nasdaq OMX Group (NASDAQ: <a class="ticker" href="/stock/ndaq#NASDAQ">NDAQ</a>) changed some of its rules governing new additions to the prestigious Nasdaq 100 Index prior to Facebook's IPO. In theory, that should have given Facebook an opportunity to slide into the index when it rebalances this month, <a href="http://www.indexuniverse.com/hot-topics/14535-facebook-joins-nasdaq-q-50-index.html">Index Universe reported</a>.

Facebook's struggles mean it will not be heading into the Nasdaq 100 or the PowerShares QQQ (NASDAQ: <a class="ticker" href="/stock/qqq#NASDAQ">QQQ</a>), the Nasdaq 100 tracking ETF, at the next rebalance. There is some good news for Facebook, though. Nasdaq OMX announced Monday that the stock will join eight others, including another beaten down social media name, Groupon (NASDAQ: <a class="ticker" href="/stock/grpn#NASDAQ">GRPN</a>), in joining the NASDAQ Q-50 Index.

The NASDAQ Q-50 Index is not linked to any ETFs, but it is sort of a "minor league" for the Nasdaq 100 because the former is home to the stocks next in line to be added to the latter. 

Interestingly, one of the stocks being removed from the NASDAQ Q-50 Index is Sina (NASDAQ: <a class="ticker" href="/stock/sina#NASDAQ">SINA</a>), a social media firm commonly referred to as China's answer to Twitter. With a weight of 7.1 percent, Sina is the third-largest holding in the Global X Social Media Index ETF (NASDAQ: <a class="ticker" href="/stock/socl#NASDAQ">SOCL</a>). SOCL is also the only ETF with any noteworthy exposure to Facebook to this point with an allocation of 5.7 percent to Mark Zuckerberg's company. 

Index Universe notes Facebook could join the First Trust Dow Jones Internet Index Fund (NYSE: <a class="ticker" href="/stock/fdn#NYSE">FDN</a>) as soon as Friday when that ETF rebalances. The $481.7 million FDN is home to 41 stocks with Google (NASDAQ: <a class="ticker" href="/stock/goog#NASDAQ">GOOG</a>) and Amazon (NASDAQ: <a class="ticker" href="/stock/amzn#NASDAQ">AMZN</a>) combing for almost 19 percent of the fund's weight. 

FDN's primary rival, the PowerShares NASDAQ Internet Portfolio (NASDAQ: <a class="ticker" href="/stock/pnqi#NASDAQ">PNQI</a>), could also become another ETF destination for Facebook. That fund also rebalances quarterly.

Beyond SOCL, Facebook currently has a presence in other ETFs, but the footprint is light. The stock accounts for 0.43 percent of the Shares Dow Jones U.S. Technology Sector Index Fund (NYSE: <a class="ticker" href="/stock/iyw#NYSE">IYW</a>) and 0.13 percent of the iShares Russell 1000 Growth Index Fund (NYSE: <a class="ticker" href="/stock/iwf#NYSE">IWF</a>) as two examples.

For more on Facebook and ETFs, click <a href="http://www.benzinga.com/analyst-ratings/analyst-color/12/09/2908758/etf-still-the-better-social-media-bet-than-facebook">here</a>.

Intraday Update

First Trust Dow Jones Internet Index Fund

GRPN

iShares Dow Jones US Technology Sector Index Fund

NDAQ

PNQI

SINA

SOCL

Facebook Could Find More ETF Residences

This time a year ago, Green Mountain Coffee Roasters (NASDAQ: <a class="ticker" href="/stock/gmcr#NASDAQ">GMCR</a>) was on a tear, hitting new multiyear highs throughout July. But 2012 has not been as kind to the stock. Shares were trading at 52-week lows last month. Social Market Analytics (SMA) examined the specialty coffee roaster and retailer, as <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/07/2727124/social-market-analytics-revisits-green-mountain-coffee-roaste">discussed by Benzinga</a> on Monday. SMA indicated that, although the stock was moving contrary to broader market trends, Green Mountain may have bottomed and some positive market sentiment was developing.

Shares of Green Mountain jumped late last week and are now more than 18 percent higher than a week ago. But the share price is still more than 30 percent lower over the last six months. This Vermont-based company has a market capitalization of more than $3.6 billion. For investors, positives include P/E and PEG ratios lower than the industry average, as well as a long-term earnings per share (EPS) growth forecast of more than 32 percent. There is also a healthy return on equity of 20.6 percent, and analysts have a consensus price target that is more than double the current share price. However, investors should also note that short interest on the stock is more than 17 percent of the float. And over the past six months, the stock has underperformed competitors such as Peet's Coffee &amp; Tea (NASDAQ: <a class="ticker" href="/stock/peet#NASDAQ">PEET</a>) and Starbucks (NASDAQ: <a class="ticker" href="/stock/sbux#NASDAQ">SBUX</a>).

Shares of both of these competitors also have seen slumps in recent weeks. In the beginning of May, Green Mountain <a href="http://www.benzinga.com/news/earnings/12/05/2553032/green-mountain-coffee-roasters-plunges-on-q2-results-guidance-cut">slashed its guidance</a>, and Peet's posted weak first-quarter results, driving shares in the industry lower. But since then, have Peet's and Starbucks bottomed as well? Some signs suggest that may be so.

Peet's, a producer of coffee, tea other packaged foods, has seen its shares trade between $55 and $65 since the plunge following the first-quarter report. That is the same range in which it traded last November through January, before breaking higher early this year. This California-based company sports a market cap of more than $760 million. Investors may like the long-term EPS growth forecast of about 23 percent, as well as the consensus price target, which is more than 20 percent higher than the current share price. However, investors should also note that short interest in the stock is more than 25 percent of the float. Also, the P/E and PEG ratios are higher than the industry average. And, over the past six months, the stock has underperformed the broader markets.

Like Peet's, Seattle-based Starbucks has pulled back from a 52-week high back in April. Starbucks, though is down only about 15 percent from the high, compared to Peet's 27 percent drop. Starbucks shares are also up more than 13 percent year to date, outperforming the Dow and the Nasdaq. Starbucks is an S&amp;P 500 component with a market cap of more than $39 billion. The company also offers a dividend yield near 1.3 percent and it has long-term EPS growth forecast is 18.9 percent. The company has a healthy 28.1 percent return on equity, and its operating margin is higher than the industry average. The P/E and PEG ratios are also above the industry average, but not by much.

Investors interested in exchange-traded funds with Green Mountain holdings may want to consider iShares Russell 1000 Growth Index (NYSE: <a class="ticker" href="/stock/iwf#NYSE">IWF</a>) or PowerShares QQQ (NASDAQ: <a class="ticker" href="/stock/qqq#NASDAQ">QQQ</a>). For ETFs invested in Peet's, consider iShares Russell 2000 Growth Index (NYSE: <a class="ticker" href="/stock/iwo#NYSE">IWO</a>) or Vanguard Small Cap ETF (NYSE: <a class="ticker" href="/stock/vb#NYSE">VB</a>). And for Starbucks, Consumer Discretionary Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xly#NYSE">XLY</a>) or Vanguard Growth ETF (NYSE: <a class="ticker" href="/stock/vug#NYSE">VUG</a>). These ETFs are all up more than 10 percent year-to-date and trading within about 10 percent of their 52-week highs.

Earnings

Guidance

Futures

GMCR

PEET

SBUX

Select Sector SPDR-Consumer Discretionary