The 9 Top ETFs to Buy as Value Stocks Take the Lead

Uncertainty around tariffs, inflation, and the economy has driven investors to sell risk-on assets in favor of risk-off investments in 2025. Among those risk-on assets being sold: growth stocks. For the year to date through April 11, the Morningstar US Growth Index has underperformed the Morningstar US Value index by more than 9 percentage points.

Yet, despite the shift in market sentiment, the value stocks that Morningstar covers still look 14% undervalued, while the growth stocks under coverage are just 5% undervalued, reports Morningstar’s chief US market strategist Dave Sekera.

Is there still time to buy value stocks? Sekera says yes.

“Value stocks remain more attractive than growth stocks on both a relative and absolute basis,” he argues. “Value stocks have only traded at this much of a discount or more less than 15% of the time since 2010.”

However, Sekera acknowledges that it could take a while before the market sentiment shifts to a positive view on small-value stocks, given the current cloud around monetary policy and the economy.

Investors who’d like to tilt their portfolios toward value (or those who may simply find their portfolios light on value names) but don’t want to pick individual stocks have several top exchange-traded funds to choose from.

The 9 Best ETFs to Buy That Invest in Value Stocks

These ETFs all land in one of the value Morningstar Categories and earn Morningstar Medalist Ratings of Gold with 100% analyst coverage. All data is as of April 14, 2025.

1. Brandes U.S. Value ETF BUSA
2. Dimensional US Targeted Value ETF DFAT
3. Schwab U.S. Dividend Equity ETF SCHD
4. Vanguard High Dividend Yield ETF VYM
5. Vanguard Mid-Cap Value ETF VOE
6. Vanguard Russell 1000 Value ETF VONV
7. Vanguard S&P 500 Value ETF VOOV
8. Vanguard Small-Cap Value ETF VBR
9. Vanguard Value ETF VTV

Our list of the top value ETFs to invest in illustrates that there are many ways to pursue a value strategy. For example, while most of the names on this list are passively managed, two actively managed options made the cut. The ETFs that are passively managed all track different value indexes, too. And finally, two ETFs on the list aren’t even expressly value funds; they’re dividend ETFs that generally favor the higher dividend stocks you’ll often find in traditional value sectors like financials, healthcare, and energy.

Value Stock ETFs With Top Morningstar Ratings

Here’s more about each of the top value stock ETFs to buy, along with commentary from the analyst who covers the fund.

Brandes U.S. Value ETF

• Active or Index? Active
• Morningstar Category: Large Value
• Top Three Sectors: Financial Services (26%), Healthcare (22%), Technology (14%)

The first of two actively managed funds on our list of the best value stock ETFs to invest in, Brandes US Value ETF pursues a low-turnover strategy with roots dating back to 1991.

Brandes’ investment philosophy is inspired by the classic value approach for which Graham and Dodd laid the foundation. The managers seek to exploit behavioral biases that lead to mispriced securities and take advantage of opportunities when a stock trades at a meaningful discount to their collective estimate of intrinsic value, using margin of safety as a key driver of position size. The bottom-up, benchmark-agnostic approach is applied shopwide, and Brandes’ strong investment culture ensures a disciplined execution of the well-structured, repeatable, and robust investment process.

The analysts, organized into eight sector teams, generate ideas either through quantitative screens, using different valuation metrics depending on the sector being researched, or more qualitatively through company calls, conferences, external research, and news flow. Their deep-dive fundamental analysis and estimates of intrinsic value are used as input in the weekly Global Large Cap Investment Committee meetings. All four members independently scrutinize new investment ideas and calculate an intrinsic value based on their own assumptions and valuation methodology, paying special attention to factors such as key business drivers, risk factors, and cyclicality. Although their estimates of intrinsic value typically don’t differ too much from what the analyst concluded (plus/minus 10%), this approach ensures that different perspectives are used to deepen the analysis and to get an idea about the range of intrinsic values for a given stock. This informs position sizing for their margin-of-safety-driven portfolio of 50-80 stocks. The managers are willing to pursue contrarian investment opportunities, invest for the long term, and stick with their positions during periods of headwinds. While the approach is time-tested and has delivered strong results over the long term through effective stock selection, the search for value can sometimes lead managers to invest in value traps.

The portfolio’s strict adherence to its value philosophy is evident in its positioning within the Morningstar Style Box. Throughout its history, it has consistently demonstrated a stronger value bias compared with the Morningstar US Large-Mid Cap Broad Value Index and many of its peers. The manager’s contrarian mindset is reflected in the portfolio’s typical underweighting of stocks with positive momentum and higher exposure to those that are unpopular, as indicated by Morningstar’s Risk Model. The team’s independent thinking is also apparent in its willingness to invest in stocks targeted by short-sellers.

Although the portfolio tends to have less exposure than its average peer group to stocks that score highly on quality metrics like return on equity or return on invested capital, the companies it invests in generally exhibit strong financial health. Financials has consistently been a favored sector, historically accounting for about 30% of the portfolio. In this sector, the managers favor banks, with long-standing investments in companies like Wells Fargo, JPMorgan, and Bank of America, which have been part of the portfolio for over a decade. It underlines the low portfolio turnover, which is typically between 20% and 40% per year. The allocation to the technology sector has been gradually reduced, declining to around 15% since its 30% peak in 2015. This reduction exemplifies the managers’ valuation discipline, as demonstrated by the 2024 exit from Applied Materials. The portfolio’s mid-cap tilt has steadily increased over time, reaching nearly 40% at the end of July 2024—a record high for the strategy and roughly double the exposure of the Morningstar US Large-Mid Cap Broad Value Index. Cash levels, which were higher during the strategy’s early days, are now expected to remain below 5%.

Read Morningstar’s full report on Brandes U.S. Value ETF.

Dimensional US Targeted Value ETF

• Active or Index? Active
• Morningstar Category: Small Value
• Top Three Sectors: Financial Services (30%), Industrials (15%), Consumer Cyclical (14%)

The only active small-cap fund on our list of the best value stock ETFs, Dimensional US Targeted Value focuses on stocks from the cheaper half of the US mid- and small-cap markets.

A time-tested approach, broad portfolio, market-cap-weighted construction, and Dimensional’s flexible trading support an Above Average Process rating.

Dimensional’s portfolio managers start with the cheaper half of the US market, as measured by price/book ratio, that falls outside of the largest 500 names by market cap. Next, they remove REITs, utilities, new IPOs, and acquisition targets. They also omit the least profitable stocks by dividing the fund’s selection universe into four quartiles based on the price/book ratios and market cap. Within the mid-cap segment, they remove the least profitable 80% of names from the more expensive half and the least profitable 10% of stocks from the cheaper half. In the small-cap market, they exclude only the least profitable 10% in the more expensive half. They weight qualifying stocks by market cap, which reduces turnover and taxes.

The fund’s traders play an important role in executing the strategy. Managers provide them with a pool of eligible stocks to trade, giving them the freedom to trade patiently and prioritize names that are less expensive to transact.

This is one of the broadest portfolios in the small-value category, and it mitigates stock-specific risks better than many of its peers. It holds more than 1,400 stocks, and its 10 largest names represent only 7% of its assets. Weighting by market cap and patient trading have translated into low turnover, which typically lands below 25% per year.

The portfolio has a price/book ratio similar to that of the Russell 2000 Value Index, but its average market cap has been larger because it includes some mid-cap names. The fund avoids the least profitable names, and its average profitability, as measured by return on invested capital, has been slightly higher than the Russell 2000 Value Index’s. While the differences have not been big, leaning toward more profitable firms should steer the portfolio away from the riskiest stocks in the small-value segment of the market.

The fund’s sector composition differs modestly from the benchmark. It intentionally excludes utilities because Dimensional believes these stocks tend to look cheap but have limited upside because they are strictly regulated. Stocks from the materials and industrials sectors account for a slightly larger portion of this portfolio than in the Russell 2000 Value Index. These mild differences shouldn’t adversely affect the fund’s performance.

Read Morningstar’s full report on Dimensional US Targeted Value ETF.

Schwab U.S. Dividend Equity ETF

• Active or Index? Index
• Morningstar Category: Large Value
• Top Three Sectors: Consumer Defensive (20%), Energy (19%), Healthcare (15%)

Schwab U.S. Dividend Equity is the first fund on our list that pursues a dividend strategy. The portfolio is heavily skewed toward high-quality dividend stocks.

The Dow Jones U.S. Dividend 100 Index selects constituents from the Dow Jones U.S. Broad Market Index, which covers the broad US stock market but excludes REITs. To be eligible for the index, stocks must exceed a $500 million market cap, be easy to trade, and—most importantly—have paid cash dividends for at least 10 straight years. The index ranks stocks that check those boxes by indicated annual dividend yield and screens out the bottom half.

The remaining stocks receive a composite score that equally weights four metrics: free cash flow/total debt, return on equity, yield, and five-year dividend growth rate. The index ranks stocks by their composite scores and retains current constituents that land in the top 200. The index then adds the highest-scoring newcomers until 100 firms fill the portfolio. Prioritizing existing holdings outside the top 100 can omit more qualified stocks, but the reduced turnover and transaction costs make it a worthy sacrifice. The index is reconstituted annually.

The index weights its selections by market cap, which leverages the market’s consensus expertise to size positions. The index caps each stock’s weighting at 4% of the portfolio and each sector’s weighting at 25% to rein in concentration. Stock and sector weightings can spill over these limits between each quarterly rebalance, but the index can rebalance on an ad hoc basis to stymie concentration.

This portfolio is chock-full of high-quality franchises. Known commodities like Pfizer and T. Rowe Price shape most of it. Nearly 65% of the portfolio boasts a wide economic moat versus 43% of the Russell 1000 Value Index. Wide-moat stocks tend to churn out profits, explaining how this fund’s return on assets, a profitability measure, reliably exceeds that of the category index. This high-quality tilt and market-cap weighting help the fund take market turbulence in stride because the largest, most profitable stocks tend to absorb it best.

Good companies don’t come cheap, but targeting the higher-yielding half of dividend payers keeps this fund in value territory. Mature, slow-growing companies tend to find a home here, giving it a cheaper price/earnings ratio than the category benchmark. The fund doesn’t lean as heavily into statistically cheaper sectors as that index, though. It tends to overweight technology and consumer discretionary stocks at the expense of financials, real estate, and utilities.

This 100-stock portfolio looks a lot different from its category index. Roughly 10% of their holdings tend to overlap, so they perform differently at times. This fund is also more top-heavy: It stashed 43% of its portfolio in the top 10 holdings as of the end of February, a higher share than most index strategies. Concentration need not be a huge concern, though. The fund caps each holding at 4% of the portfolio and each sector at 25%.

Read Morningstar’s full report on Schwab U.S. Dividend Equity ETF.

Vanguard High Dividend Yield ETF

• Active or Index? Index
• Morningstar Category: Large Value
• Top Three Sectors: Financial Services (23%), Technology (13%), Consumer Defensive (13%)

Vanguard High Dividend Yield ETF is the second of two dividend stock funds among the best value stock ETFs to buy. Its expense ratio is among the lowest in the large-value category.

The fund tracks the FTSE High Dividend Yield Index, which captures the highest-yielding half of the large- and mid-cap dividend-paying stock universe. The index starts with the FTSE USA Index and ranks its constituents by their projected 12-month yield. It then adds stocks by descending rank until it captures 50% of the dividend-paying universe’s market cap. As it aims for 50% market-cap coverage of this cohort, the fund tends to sweep in about 400 to 450 stocks, but that number increased to about 550 in 2024. Companies that have not paid dividends in the past 12 months or are not expected to pay one in the next 12 months are not eligible. REITs are also left out.

The index implements buffer rules at its semiannual reconstitution. Current holdings will stay in the index until their yield falls below the 55th percentile, while new entrants can only be added after their yield passes the 45th percentile. This has helped to keep a lid on turnover:

This strategy has delivered on its high-yield objective. Historically, its trailing 12-month dividend yield has been about 1 percentage point higher than that of the Russell 1000 Value.

Diversification remains central to this strategy despite prioritizing dividend yield. This portfolio typically holds over 400 stocks while hovering around 25% of assets in its top 10 holdings in recent years. Large companies with steady earnings headline the portfolio, including industry leaders Johnson & Johnson, The Home Depot, and JPMorgan Chase. These types of companies tend to smooth out the return volatility.

Read Morningstar’s full report on Vanguard High Dividend Yield ETF.

Vanguard Mid-Cap Value ETF

• Active or Index? Index
• Morningstar Category: Mid-Cap Value
• Top 3 Sectors: Financial Services (19%), Industrials (14%), Utilities (12%)

The only ETF on our list that lands in the mid-cap value category, Vanguard Mid-Cap Value ETF tends to maintain a higher market-cap weighting than its category peers, which has (along with a lower fee) given it a risk-adjusted return advantage during the past decade.

The ETF diversifies away most stock-specific risk with its broad reach, supporting an Above Average Process Pillar rating.

The CRSP US Mid Cap Index excludes the largest 70% and smallest 15% of US stocks by total market cap. CRSP buckets each eligible constituent in the corresponding growth or value index based on their composite style score. Each index weights constituents by their float-adjusted market cap. The value index collects those landing in the cheaper half of the opportunity set. A stock that lands near the value/growth border may have its market cap split across value and growth indexes, but such instances are rare: The mid-cap growth and value indexes share about 3% of holdings.

Market-cap-weighting is an inherently low-turnover approach, and generous buffer rules and trading windows further help tame turnover and associated trading costs. A stock’s style traits or market cap must change considerably for it to move into an adjacent index. Should that occur, the fund initially trades 50% of the stock’s market cap to protect against one-off fluctuations. This has put a lid on turnover, which has averaged 20% annually since 2014. CRSP spreads trades over five days to mitigate market-impact costs at each quarterly rebalance. These unique steps should reduce unnecessary turnover and marginally reduce trading costs over time.

The portfolio effectively represents the mid-cap value market segment, allowing its low fee and outstanding diversification to translate into a performance edge. The fund holds 185 stocks, with just 13% of assets concentrated in the top 10. The fund effectively spreads risk across its broad allocation, with no one stock accounting for more than 2% of the portfolio.

Factor exposures closely mimic the category average apart from size. Generous buffer rules allow relatively large stocks to populate a greater proportion of this portfolio relative to competitors. This, coupled with market-cap-weighting, contributes to acute sector biases relative to the category average and pushes its average market cap higher than the norm. With an average market cap of about $33 billion, the fund’s average constituent is about $14 billion larger than the category norm. This is not a bad thing, though. Larger stocks are typically more stable than their smaller counterparts, which may help tame volatility and protect the fund during particularly stressed periods.

Read Morningstar’s full report on Vanguard Mid-Cap Value ETF.

Vanguard Russell 1000 Value ETF

• Active or Index? Index
• Morningstar Category: Large Value
• Top Three Sectors: Financial Services (23%), Healthcare (14%), Industrials (13%)

Vanguard offers several top-rated ETFs tracking slightly different value stock indexes. Vanguard Russell 1000 Value ETF is an inexpensive way to get exposure to the value side of the popular Russell 1000 Index.

The price/book ratio constitutes 50% of the composite style score, and the two growth metrics represent 25% apiece. Stocks in the cheapest quartile are fully allocated to the value index, while those in the most growth-oriented quartile are fully allocated to the Russell 1000 Growth Index. Stocks that fall in between are partially allocated to each index based on the strength of their value and growth characteristics. The index implements value-growth score buffers around its lower bound to limit turnover. The index is reconstituted annually.

The fund accurately captures the opportunity set available to its average category peer. Compared with its average peer, the fund is slightly overweight in communication services and real estate stocks and lightly underweight in technology stocks. The fund has historically traded at a similar valuation as its average peer. However, its average market cap is slightly lower, owing to its broader reach, which improves diversification but may hurt performance when larger caps rally.

The fund does not strictly hold value stocks. It also holds names with higher valuations that don’t quite qualify as growth stocks. They can temper the fund’s value exposure and provide a modest buffer when the cheapest value stocks underperform. Companies like UnitedHealth Group and newly undervalued META Platforms fit this description. Additionally, this fund shares around a third of its portfolio with its sister ETF, iShares Russell 1000 Growth.

Like many of its large-value peers, the fund carries persistent sector biases versus the broader market. Compared with the Russell 1000 Index, the fund tilts toward financials and energy stocks while underweighting technology and healthcare stocks.

Read Morningstar’s full report on Vanguard Russell 1000 Value ETF.

Vanguard S&P 500 Value ETF

• Active or Index? Index
• Morningstar Category: Large Value
• Top Three Sectors: Technology (24%), Financial Services (16%), Healthcare (15%)

Vanguard S&P 500 Value ETF has the largest weighting in technology stocks among the names on our list of top ETFs to buy. That’s not entirely surprising, given the huge weighting tech stocks have in the S&P 500 and how the index this ETF tracks is assembled.

It calculates a value-growth composite score for each stock. The value metric is based on stocks’ price/ book, price/ earnings, and price/ sales ratios. Then, each stock is assigned to either the S&P Value or S&P 500 Growth Index. Stocks exhibiting less-pronounced growth or value traits are then allocated to each index based on the relative strength of their traits until each index reaches half of the S&P 500’s market cap. The index weights stocks by their market cap and implements value-growth score buffers around its lower bound to limit turnover. The index is reconstituted annually.

The fund accurately captures the opportunity set available to its category peers. The fund’s sector allocations did not deviate from the category average by more than 7% as of March 2023. However, the fund’s sector allocations changed toward the end of 2022. Compared with its average peer, the fund now overweights technology and consumer cyclicals stocks by 6 and 3 percentage points, respectively, while underweighting healthcare and energy stocks. When calculating stocks’ growth scores, the index considers their momentum over the trailing 12 months. Cheaper companies can meet the momentum criteria during value rallies, as happened in 2022 when value stocks were among the bear market’s most resilient.

The fund also holds names with higher valuations that don’t qualify as growth stocks. They can temper the fund’s value exposure and provide a modest buffer when value stocks underperform. Companies like JPMorgan Chase and newly undervalued technology stocks such Amazon.com AMZN and Meta Platforms fit this description.

The fund has historically traded at similar valuations to its average peer. However, the fund’s portfolio comes with higher valuations than peers after its recent rebalance into technology and consumer cyclicals. However, the fund is better diversified than its average peer. The top 10 holdings constitute 21% of the portfolio, which is 10 percentage points lower than the category average as of March 2023.

Like many of its large-value peers, the fund carries persistent sector biases versus the broader market. Compared with the Russell 1000 Index, the fund tilted into financials and industrials stocks while underweighting technology and healthcare stocks, as of March 2023.

Read Morningstar’s full report on Vanguard S&P 500 Value ETF.

Vanguard Small-Cap Value ETF

• Active or Index? Index
• Morningstar Category: Small Value
• Top Three Sectors: Financial Services (21%), Industrials (19%), Consumer Cyclical (15%)

The only small-cap index fund on our list of the best value stock ETFs to buy, Vanguard Small-Cap Value ETF has notched superior risk-adjusted returns relative to its category.

The strategy effectively captures the full small-cap value market segment and diversifies away most stock-specific risk with its broad reach. It earns an Above Average Process Pillar rating.

The CRSP US Small Cap Index excludes the largest 85% and smallest 2% of US stocks by total market cap. CRSP buckets each eligible constituent in the corresponding growth or value index based on a composite style score. Each index weights constituents by float-adjusted market cap. The value index collects those landing in the cheaper half of the opportunity set. Stocks that land near the value/growth border may have their market cap split across value and growth indexes, but such instances are rare: The small-cap growth and value indexes share about 3% of their holdings.

Generous buffer rules and trading windows help tame turnover and the associated trading costs. For a holding to move into an adjacent index, its style traits or market cap must change considerably. Should that occur, the fund initially trades 50% of the stock’s market cap to protect against one-off fluctuations. This has put a lid on turnover, which has averaged less than 20% annually since 2014. CRSP spreads trades over five days to mitigate market-impact costs at each quarterly rebalance. These steps should reduce unnecessary turnover and marginally reduce trading costs over time.

The portfolio effectively represents the entire small-cap value category. Its sector allocations and key value metrics are closely tied to the category average, which means its outstanding diversification and low fee should translate into a long-term performance edge.

The portfolio usually holds more than 800 stocks, with less than 6% of assets typically allocated to its top 10 holdings. Like value index funds across the market-cap spectrum, financials and industrials stocks are the most prominent. Together, their 41% weighting is 1 percentage point less than the category average, but the fund is 3 percentage points underweight in financials and overweight in industrials. Down the portfolio, most other sector allocations mirror the category norm, apart from an overweight position in real estate stocks offset by an underweight position in energy stocks. These differences could steer short-term returns, but over time, any impact should be overshadowed by portfolio similarities and the fund’s low fee.

Market-cap-weighting contributes to a slightly larger orientation than the category norm, which improves the fund’s breadth. Its largest holdings are usually more common in mid-cap index funds than small-cap funds, but their presence and prominence here may temper overall volatility as larger firms tend to be more stable.

Read Morningstar’s full report on Vanguard Small-Cap Value ETF.

Vanguard Value ETF

• Active or Index? Index
• Morningstar Category: Large Value
• Top Three Sectors: Financial Services (24%), Healthcare (17%), Industrials (13%)

The final fund on our list of the best value ETFs to buy, Vanguard Value ETF, closely mimics the characteristics of its peers in the large-value category when it comes to sector allocations and value factors like price/earnings and dividend yield.

The fund tracks the CRSP US Large Cap Value Index, which is derived from the CRSP US Large Cap Index. This parent index encompasses the largest 85% of the US stock market by market capitalization and assigns a style score to each constituent. Style scores consider metrics like dividend yield, price multiples, and earnings growth. Stocks then join the value or growth index based on their style score, and some companies are partially allocated to each if they don’t exhibit strong growth or value characteristics. The index reconstitutes quarterly and uses buffer rules to minimize turnover.

Market-cap-weighting is a reasonable approach for the large-value category because large-cap stocks usually reflect new information quickly, making it hard for active managers to gain an edge. Market-cap-weighting also requires low trading costs. It follows the wisdom of crowds and takes the guesswork out of stock selection. This index can hold stocks that have deteriorating fundamentals or limited growth prospects, but market-cap-weighting reduces that risk since those stocks’ weight falls alongside their prices, leaving a smaller mark on the portfolio.

The index looks a lot like the large-value category average. Sector allocations typically stay within 5 percentage points of its peers, and no sector deviated by more than 3 percentage points as of February 2025. The index’s value characteristics mirror the pack. Its price/earnings ratio and dividend yield, for instance, have consistently matched its peers’.

The index is slightly more diversified than the category average, holding around 340 stocks over the past five years compared with the peer average of 300. The top 10 holdings represent only 22% of the portfolio, which is less concentrated than its peers’ 31%. Large companies with steady earnings, such as JPMorgan Chase and Johnson & Johnson, make up a sizable portion of the portfolio and provide ballast. Those industry fixtures land in the value index because of their maturity and slow growth—not wobbling fundamentals and high risk.

The fund’s fully invested stance could result in larger losses during market downturns compared with peers that may hold cash. However, it captures the large-value opportunity set well, which should drive sound category relative performance.

Read Morningstar’s full report on Vanguard Value ETF.