For Value ETFs, the Bet Is on Financial Stocks: Institutional Investor Report

ii_logo_240px-wide Courtesy of Barry Whyte/II Magazine

Latest data show that most funds have weightings of more than 20 percent in financials.

If the portfolios of value-oriented ETFs are anything to go by, the best value stocks out there at the moment are in the financial sector.

The findings come from a detailed analysis of 18 value ETFs done by financial data firm Axioma on behalf of Institutional Investor.

According to the data from June 14, 2013, while virtually all of the funds share roughly similar allocations to sectors such as energy, health care, industrials and information technology, every one of the funds has made very large bets on stocks within the financial sector.

Of the 18 funds, all but one has made the financial sector its largest exposure. Only the First Trust Large-Cap Value Alphadex Fund deviates from this trend, with a slightly larger exposure to energy stocks (16.7 percent) compared to its 15.8 percent exposure to financials. For all other ETFs analyzed, the big bet is financial.

Among midcap focused funds, the bet is even greater, with each of the iShares Russell Midcap Value Index Fund, the Vanguard Midcap Value Fund and the SPDR S&P 400 Midcap Value ETF respectively placing 30.5 percent, 20.9 percent and 27.3 percent on financial stocks. The two largest single bets on the financial sector exist among the small-cap-focused funds.   For the remainder of the II Magazine report, please click here.