Finally! A Value ETF Tripled the S&P 500’s Return And Investors Can Take A Victory Lap

iShares MSCI USA Value Factor ETF (NYSEARCA:VLUE) targets a specific investor problem: capturing value stock outperformance without the concentration risk of individual stock picking. With $9.6 billion in net assets and a 0.15% expense ratio, the fund provides institutional-grade access to systematic value investing at a fraction of active management costs. The timing matters now because value has sharply outpaced growth in recent months. VLUE posted a 38.25% one-year return through February 17, 2026, more than tripling the SPDR S&P 500 ETF Trust (NYSEARCA:SPY)’s performance. This outperformance signals a meaningful rotation from growth narratives to fundamental valuations.

VLUE’s return engine operates through factor-based selection rather than traditional market-cap weighting. The fund tracks the MSCI USA Enhanced Value Index, screening for stocks with low price-to-book, price-to-earnings, and price-to-sales ratios. This methodology produces an unexpected result: Information Technology commands 35.1% of the portfolio, led by semiconductor stocks like Micron Technology (NASDAQ:MU) and Intel (NASDAQ:INTC). This tech-heavy allocation means VLUE behaves differently than traditional value funds—it generates returns from business fundamentals improving faster than market expectations, not from dividends. The 1.91% yield reflects this growth-oriented value approach, where the fund targets undervalued companies with earnings power rather than income generation.

VLUE’s recent performance validates its value mandate during market rotations. The fund captured a 10.52% year-to-date gain through mid-February while SPY remained essentially flat, demonstrating how factor-based strategies can outperform during style shifts. This outperformance reflects a broader pattern where VLUE’s methodology positions it between pure value approaches like Vanguard Value ETF (NYSEARCA:VTV) and broad market exposure—capturing value premiums while maintaining exposure to secular growth sectors. The strategy works when markets reward cash flows over growth narratives, making timing and market cycle awareness critical for investors.

Three constraints define VLUE’s tradeoffs. First, tech concentration creates cyclical volatility—semiconductor exposure means sensitivity to memory pricing cycles and capital expenditure trends. Second, the 30% annual turnover exceeds pure index funds, potentially creating tax drag in taxable accounts. Third, factor timing matters: value underperforms during growth-dominated markets, as evidenced by the fund’s relative weakness before the recent rotation.

VLUE fits portfolios seeking systematic value exposure with acceptance of sector concentration risk and cyclical underperformance periods, but investors expecting traditional defensive value characteristics should recognize the tech-heavy reality differs from that profile.