SA #14: IWN – Low Growth Is Not Necessarily Value

IWN: Low Growth Is Not Necessarily Value
February 28, 2023

Summary

  • Systematic value investing is the idea that fundamentally cheap stocks tend to outperform expensive stocks over the long term on average.
  • The iShares Russell 2000 Value ETF tracks the Russell 2000 Value Index and offers a simple, transparent, and cheap implementation of the value premium for US small caps.
  • Unfortunately, the index equates “value” with “low sales growth” and therefore contradicts with well-known results of the academic and practitioner literature on the value factor.
  • Despite decent performance since inception in 2000 and over the last years, IWN is therefore not my preferred value instrument.
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