A lot of ETFs marketed as “value funds” aren’t nearly as different from the S&P 500 as investors might think. In many cases, they’re simply large-cap core portfolios with a little less exposure to expensive growth stocks. If you really want to tilt toward value, I think you have to be willing to be a contrarian.
That means looking beyond the familiar mega-cap names and toward companies that have little or no overlap with popular benchmarks like the S&P 500. It also means accepting long stretches where growth stocks dominate headlines while your portfolio barely outpaces Treasury bills.
That’s the reality of factor investing. The value premium has historically shown up over very long periods, but it can disappear for years at a time. Not many investors have the patience to stick with it, which is one reason truly differentiated value ETFs remain relatively rare.
Fortunately, there are still a handful of funds that fully embrace the philosophy by targeting smaller, deeply out-of-favor companies that Wall Street has largely written off. Here are two of my favorites that remain relatively under-the-radar.
Acquirers Small and Deep Value ETF (DEEP)
Acquirers Small and Deep Value ETF (DEEP) tracks the Acquirers Deep Value Index, which identifies companies primarily using a valuation metric known as the Acquirer’s Multiple. The Acquirer’s Multiple is based on enterprise value (EV) divided by EBITDA.
Enterprise value represents the total cost of buying a company outright. Rather than looking only at market capitalization, it also adds debt and preferred equity while subtracting excess cash, giving a more complete picture of what an acquirer would actually pay.
EBITDA, which stands for earnings before interest, taxes, depreciation, and amortization, attempts to measure a company’s operating profitability before financing decisions and certain accounting expenses. Because it focuses on the underlying business rather than capital structure, EV/EBITDA has long been a favorite valuation metric when screening potential takeover candidates.
DEEP uses this framework to build a portfolio with virtually no overlap with the S&P 500, focusing primarily on deeply discounted small-cap companies. That means performance can look dramatically different from the broad market. So far in 2026, that difference has been positive.
As of June 30, DEEP had returned 19.57% year to date, comfortably ahead of VOO, which gained 10.16% over the same period. The biggest drawback is cost. DEEP charges a 0.80% expense ratio, making it one of the more expensive passive equity ETFs available. That fee compounds year after year, so investors should have a high degree of conviction before committing capital.
Alpha Architect U.S. Quantitative Value ETF (QVAL)
Among factor-investing specialists, Alpha Architect has built a strong reputation for translating academic finance research into practical ETF strategies with an emphasis on disciplined, rules-based implementation rather than discretionary stock picking.
Its flagship domestic value strategy is the Alpha Architect U.S. Quantitative Value ETF (QVAL) at a 0.28% expense ratio. Like DEEP, QVAL focuses on deeply undervalued companies, but it screens them using EBIT divided by Total Enterprise Value (TEV) rather than EV/EBITDA.
EBIT, or earnings before interest and taxes, excludes depreciation and amortization adjustments that EBITDA ignores. Alpha Architect believes this provides a more conservative measure of a company’s true operating profitability by recognizing that many businesses eventually need to replace depreciating assets.
Total Enterprise Value is similar to traditional enterprise value but incorporates additional adjustments designed to better reflect the full economic value of the firm. Together, EBIT/TEV aims to identify companies generating strong operating earnings relative to the total price an investor would effectively pay to acquire the business.
While DEEP leans heavily toward small-cap stocks, QVAL generally maintains greater exposure to mid- and large-cap companies, making it somewhat less aggressive while still providing a meaningful value tilt. That approach has also been rewarded this year. As of July 31, QVAL had gained 20.72% year to date.
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