Value ETFs: What Actually Counts as Cheap?
August 19, 2026 · 2 min read · by ETFWinner Research
Every value fund uses a different definition of cheap, and the definition determines whether you end up holding solid businesses or damaged ones.
Value investing has an unusually simple premise — buy companies trading below what they are worth — and an unusually contested execution. Ask three index providers to build a value fund and you will get three portfolios with different holdings, different sector weights and different outcomes.
The metric decides everything
Traditional value screens lean on price-to-book, a measure built for an economy of factories and inventory. Applied to modern businesses whose main assets are software, brands and intellectual property, book value understates worth systematically — which is why classic value screens have persistently overweighted banks and underweighted asset-light companies.
Screens using earnings, cash flow or sales produce noticeably different portfolios from the same universe. None is definitively correct; each embeds a view about what a company is worth owning.
Mild value versus deep value
Most large value funds are mild tilts: they take the cheaper half of a large-cap index and weight by size, so the result resembles the market with a sector shift. VTV at 0.04% and SCHV at 0.04% work this way.
RPV takes the opposite approach — a concentrated selection of the cheapest names, weighted by how cheap they are, at 0.35%. It is a far more aggressive expression of the same idea and behaves very differently in both directions.
| Ticker | Fund | Expense | YTD | Yield | AUM |
|---|---|---|---|---|---|
| VTV | Vanguard Value ETF | 0.04% | — | — | 115B |
| SCHV | Schwab U.S. Large-Cap Value ETF | 0.04% | 8.50% | 2.35% | $12B |
| SPYV | SPDR Portfolio S&P 500 Value ETF | 0.04% | — | — | $20B |
| IWD | iShares Russell 1000 Value ETF | 0.19% | — | — | $55B |
| RPV | Invesco S&P 500 Pure Value ETF | 0.35% | — | — | $3B |
The trap built into value
Cheapness is often deserved. A company can trade at a low multiple because its industry is shrinking, its debt is unmanageable, or its business model is being replaced. A screen sorting purely on price ratios buys these companies enthusiastically.
This is why value screens have historically clustered in banks, energy and old-economy industrials — and why value as a style can lag for extraordinarily long stretches before working sharply in a short burst.
Using value sensibly
- Read the sector weights before the performance chart. That table tells you what the fund really is.
- Decide whether you want a tilt or a bet — mild value funds barely deviate from the market, deep value funds deviate enormously.
- Expect long dry spells. Value has historically required patience measured in years, not quarters, which is precisely why the premium may persist.
ETFs mentioned in this guide
iShares Russell 1000 Value ETF
SPDR Portfolio S&P 500 Value ETF
Invesco S&P 500 Pure Value ETF
Schwab U.S. Large-Cap Value ETF
Frequently asked questions
Why do value ETFs hold so many banks?
Traditional value screens rely on price-to-book, a metric that flatters asset-heavy businesses like banks and penalises companies whose value sits in intangibles.
What is the difference between VTV and RPV?
VTV is a broad, size-weighted mild value tilt that resembles the market. RPV concentrates on the cheapest names and weights by cheapness, making it a far more aggressive value bet.
Is value investing dead?
It has endured long periods of underperformance, particularly when growth companies led markets. The style has historically recovered sharply, but the timing has never been predictable.
What is a value trap?
A company that looks cheap on price ratios because its business is genuinely deteriorating, so the low valuation reflects reality rather than mispricing.