Many investors are drawn to value stocks for the potential to generate outsize returns, but identifying mispriced stocks takes serious research. A value exchange-traded fund (ETF) does that work for you by investing in a basket of undervalued companies, giving you instant diversification without having to pick individual stocks.
How do value ETFs work?
A value ETF pools money from investors and uses specific criteria, like low price-to-book ratios or high dividend yields, to find companies whose intrinsic value exceeds their market price. Most track an index automatically, though some are actively managed.
Unlike mutual funds, ETFs trade on an exchange throughout the day, making them more flexible and easier to transfer between brokers.
Top value ETFs to consider
ETF | Ticker | Category |
|---|---|---|
Vanguard Value ETF | Best value ETF overall | |
Vanguard Mid-Cap Value ETF | Best mid-cap value ETF | |
Avantis U.S. Small Cap Value ETF | Best small-cap value ETF | |
iShares MSCI Intl Value Factor ETF | Best international large-cap value ETF | |
VictoryShares Emerging Markets Value Momentum ETF | Best emerging market value ETF | |
Vanguard High Dividend Yield ETF | Best value dividend ETF |
Best overall value ETF: Vanguard Value ETF
NYSEMKT: VTV
Key Data Points
The Vanguard Value ETF (VTV +0.16%) is the best overall option for investors seeking diversified portfolio exposure to value stocks. With more assets under management than any other ETF in the sector, it tracks the CRSP Large Cap Value index by investing directly in its component companies. The ETF holds shares of the companies in the index in close proportion to their index weighting.
The CRSP Large Cap Value index is predominantly composed of large-cap companies, but it also includes companies with relatively small market capitalizations, providing some exposure to mid-cap stocks.
Vanguard keeps transaction fees low for the ETF's shareholders by allowing the fund's proportional holdings to deviate slightly from the composition of the underlying index. Despite that allowance, the difference between the performances of the Vanguard Value ETF and the index it tracks is extremely low and among the best in the industry. The ETF's turnover was just 8.8% in 2025.
With an expense ratio of only 0.03%, investors don't pay much in fees, either. That makes the Vanguard Value ETF one of the least expensive and most efficient ways to invest in more than 300 value stocks.
Best mid-cap value ETF: Vanguard Mid-Cap Value ETF
NYSEMKT: VOE
Key Data Points
The Vanguard Mid-Cap Value ETF (VOE -0.08%) tracks the CRSP US Mid Cap Value index by owning stocks in proportion to their weightings in the index. The CRSP US Mid Cap Value index includes companies covering 70% to 85% of cumulative capitalization and identifies value stocks based on several metrics.
Companies with high book values, projected earnings, historic earnings, dividends, or sales relative to their share prices are all potential targets for inclusion in the index.
Since the CRSP US Mid Cap Value Index is governed by more criteria, the ETF has a relatively high turnover rate, but that's an issue with all mid-cap value ETFs. With an extremely low expense ratio of just 0.05%, the Vanguard Mid-Cap Value ETF is a top way to gain exposure to medium-sized companies undervalued by the market.
Best small-cap value ETF: Avantis U.S. Small Cap Value ETF
NYSEMKT: AVUV
Key Data Points
NYSEMKT: IVLU
Key Data Points
Best emerging market value ETF: VictoryShares Emerging Markets Value Momentum ETF
NASDAQ: UEVM
Key Data Points
Investors seeking an ETF that provides portfolio exposure to undervalued companies in emerging markets can opt for shares in the VictoryShares Emerging Markets Value Momentum ETF (UEVM -0.07%)
This ETF tracks the MSCI Emerging Markets Select Value Momentum Blend index, which selects companies for inclusion based on both value and growth momentum.
The index assigns each included company a single score, giving more weight to companies with the lowest stock price volatility. Companies from China, South Korea, and Taiwan account for the majority of the index's weight.
The ETF uses representative sampling to track the underlying index, meaning the fund owns only a fraction of the stocks included in the index. Representative sampling by an ETF, while more efficient and cost-effective, reduces the correlation between the performance of the ETF and the index it tracks. The ETF's expense ratio of 0.45% is about average for emerging market ETFs.
Best value dividend ETF: Vanguard High Dividend Yield ETF
NYSEMKT: VYM
Key Data Points
Most stocks that pay dividends are considered value stocks. As such, investors will often find overlap in ETFs focused on value stocks and those focused on dividend stocks. And if you want a higher dividend yield than the average value stock ETF, you should consider the Vanguard High Dividend Yield ETF (VYM +0.03%).
The fund seeks to track the performance of the FTSE High Dividend Yield index, which includes all stocks with relatively high dividend yield forecasts. This forward-looking criterion ensures that the index's dividend yield remains consistently high.
Indeed, the recent yield on the Vanguard High Dividend Yield ETF is 2.5%, which is better than the Vanguard Value ETF by about 0.4 percentage points. Importantly, it maintains a tilt toward large-cap value stocks, so investors still gain exposure to value. The ETF charges an expense ratio of just 0.06%.
How investors use value ETFs in portfolios
Value ETFs are a simple way to increase allocation to value stocks in your portfolio. That can be done by balancing a value stock ETF with a growth stock ETF as the core of a portfolio, or an investor might opt to add a value stock ETF in addition to a broad market index fund to add additional tilt toward value stocks. Many investors like to add small-cap value stocks to their portfolio using an ETF.
Pros and cons of investing in value ETFs
Pros
- Downside protection: In a bear market, value stocks typically hold up better than the rest of the market.
- Diversification: Value ETFs can provide a diversifying factor to your portfolio.
Cons
- Less upside: Value stocks rarely climb as high or as fast as growth stocks.
- Industry concentration: Value ETFs are heavily weighted toward financials and energy stocks.
- Tracking error: Smaller indexes can introduce tracking error, leading to returns that don't match the index they're meant to match.
Value ETFs vs. dividend ETFs
Many value ETFs offer relatively high dividend yields due to the nature of value stocks. They're often mature companies with steady cash flow that supports a solid dividend. But a dividend ETF is particularly focused on dividends, either high-yielding stocks or stocks with high potential dividend growth (or some combination of both). A value ETF typically ignores the dividends of the stocks in the portfolio; they're merely a side effect of the types of stocks that usually trade for lower valuations.
How to choose a value ETF
Start by deciding what kind of exposure you want. Small-cap value stocks have historically outperformed the market, but large-cap value is less volatile. International funds add diversification but carry additional risk. If income matters, a dividend-focused fund like VYM may be the better fit.
Once you've narrowed your focus, compare expense ratios and, if the fund tracks an index, tracking error. Low tracking error matters especially if you're making regular contributions.
How to invest in value ETFs
- Open your brokerage app: Log in to your brokerage account where you handle your investments.
- Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Outlook for value ETFs in 2026
As the S&P 500 grows more concentrated in mega-cap AI and tech stocks, value investing looks increasingly attractive by comparison. If investors begin rotating away from high-multiple growth names, whether due to valuation concerns or a broader market shift, value ETFs could see meaningful outperformance this year.
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FAQ
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