Value Stocks Surge on AI Investment Cycle

Value stocks have made significant gains this year, outperforming their growth counterparts. The Russell 1000 Value Index has returned around 23% year to date, while the Russell 1000 Growth Index has seen just about 4%. The iShares MSCI USA Value Factor ETF (VLUE) has surged more than 47% year to date.

Some investors have chosen value stocks to reduce their exposure to mega-cap concentration amid heightened market volatility. Additionally, value stocks have benefited from the AI trade, which traditionally favors growth and tech-focused funds for AI exposure.

The iShares MSCI USA Value Factor ETF (VLUE) tracks the MSCI USA Enhanced Value Index, scoring each security for value characteristics relative to peers within the same GICS sector. Micron (MU) is the fund's largest position, with about a 22% weight, while information technology accounts for roughly 41% of the portfolio.

Other value ETFs that have gained from the AI trade include the iShares Russell 1000 Value ETF (IWD), which tracks the Russell 1000 Value Index and added Amazon (AMZN), Apple (AAPL), and Microsoft (MSFT) as its top holdings, and the Vanguard Morningstar Value ETF (VTV), holding large-cap US stocks that display strong value characteristics.