Advertisement
investing

An ETF That Focuses on Large-Company Bargains

This fund holds the cheapest stocks in the Russell 1000 index.

If you're looking for a low-cost way to invest in cheap, large-company stocks, consider iShares Russell 1000 Value Index Fund (symbol IWD). The index the exchange-traded fund tracks is itself a subset of nearly 700 of the stocks in the Russell 1000 index, which holds the 1,000 largest publicly traded firms based in the U.S. The ETF "fully replicates" the value side of the Russell 1000, meaning that it holds the stocks in the same weights (or almost the same weights) as the index does, says Rene Casis, an iShares ETF manager.

QUIZ: How Well Do You Know ETFs?

If you're looking for a low-cost way to invest in cheap, large-company stocks, consider iShares Russell 1000 Value Index Fund. The index the exchange-traded fund tracks is itself a subset of nearly 700 of the stocks in the Russell 1000 index, which holds the 1,000 largest publicly traded firms based in the U.S. The ETF "fully replicates" the value side of the Russell 1000, meaning that it holds the stocks in the same weights (or almost the same weights) as the index does, says Rene Casis, an iShares ETF manager.

Advertisement - Article continues below

Russell uses three valuation measures—the ratio of price to book value, the two-year earnings-growth forecast and the previous five years' growth in sales per share—to rank all the stocks in the Russell 1000. The lower the price-to-book ratio and the slower the growth, the more likely a company is to fall into the value camp. The 250 cheapest stocks go into the Value index, and the 250 most growth-oriented companies are put in the Russell Growth index (for which a comparable ETF exists). Stocks in the middle range typically go into both the Value and Growth indexes, says Tom Goodwin, a Russell director. Stocks are added to or dropped from the indexes every year in June.

The Value index holds stocks from all major sectors, with the biggest weightings in financials, energy and health care. The ETF's ten biggest holdings, among them Procter & Gamble, Wells Fargo and Berkshire Hathaway, account for 27% of its assets.

Advertisement
Advertisement

Most Popular

What Trump's Payroll Tax Cut Will Mean for You
Tax Breaks

What Trump's Payroll Tax Cut Will Mean for You

President Trump issued an executive order to suspend the collection of Social Security payroll taxes. How much will it save you?
August 10, 2020
What a Payroll Tax Cut Would Mean for You
Tax Breaks

What a Payroll Tax Cut Would Mean for You

If Congress can't pass another stimulus bill, President Trump says he will initiate a payroll tax cut by executive order. How much would that save you…
August 8, 2020
Drawing Down Retirement Savings in a Pandemic
Coronavirus and Your Money

Drawing Down Retirement Savings in a Pandemic

Tapping the right accounts at the right time matters. Knowing how much a retiree can spend each year without running out of savings in old age is even…
August 7, 2020

Recommended

Bonds: 10 Things You Need to Know
Investing for Income

Bonds: 10 Things You Need to Know

Bonds can be more complex than stocks, but it's not hard to become a knowledgeable fixed-income investor.
July 22, 2020
6 Best Biotech ETFs to Buy
ETFs

6 Best Biotech ETFs to Buy

Biotech ETFs provide access to this high-growth health care segment while limiting the impact of the industry's boom-or-bust nature.
August 7, 2020
10 Best Stocks to Buy If President Donald Trump Wins Re-Election
stocks to buy

10 Best Stocks to Buy If President Donald Trump Wins Re-Election

The 2020 election likely will be a pivot point for several areas of the market. Here are some of the best stocks to own should President Donald Trump …
August 4, 2020
10 Best Stocks to Buy If Joe Biden Wins the Presidency
stocks to buy

10 Best Stocks to Buy If Joe Biden Wins the Presidency

If Joe Biden emerges from the Nov. 3 election victorious, these 10 picks could be some of the best stocks to own under the new administration.
August 4, 2020