Should Value Investing Be Part of Your Portfolio Strategy Right Now?

The investment landscape in 2026 is shaping up to be challenging. Geopolitical flashpoints spanning from the Arctic to Asia, combined with lingering concerns about artificial intelligence overinvestment and potential tech-driven inflation, are creating an environment where traditional growth-focused strategies may not suffice. As market uncertainty persists, many investors are reconsidering their approach to capital allocation and paying increased attention to risk management strategies.

Why the Market Climate Favors Value-Oriented Approaches

In times of elevated geopolitical risk and market unpredictability, investors naturally become more cautious. The recent surge in geopolitical tensions—from Arctic territorial concerns to Middle Eastern conflicts—has triggered a flight toward safer investment positions. Simultaneously, questions linger about whether artificial intelligence investments have become overextended, while the specter of technology-sector inflation looms as a genuine market threat.

These factors have created an ideal backdrop for value investing to regain prominence. Consider the recent performance data: from January 2-6, the S&P 500 Value Index delivered approximately 2% returns, meaningfully outpacing the S&P 500 Growth Index’s 0.98% gain during the same period. This outperformance signals a potential shift in market dynamics favoring fundamentals-focused investing.

Understanding the Value Investing Framework

Value investing operates on a straightforward principle: identify stocks trading below their intrinsic worth based on fundamental analysis, then hold them until the market recognizes their true value. This approach differs markedly from growth investing, which prioritizes companies with strong future expansion potential regardless of current valuation.

The appeal of value stocks extends beyond just pricing advantages. These securities typically exhibit lower volatility and greater stability compared to their growth counterparts, making them particularly suitable for investors with lower risk tolerance or those nearing retirement. By targeting companies with solid financials and proven business models, value strategies act as a portfolio stabilizer during market turbulence.

The Practical Case for Value ETFs

While value investing principles are sound, executing them requires significant time, financial expertise, and analytical rigor. Determining a company’s intrinsic value is neither straightforward nor quick—it demands meticulous research and subjective judgment.

Exchange-traded funds addressing value investing sidestep these implementation challenges. Value ETFs provide diversified exposure to baskets of undervalued stocks, eliminating the need for individual security selection. Beyond simplicity, these funds offer meaningful income generation through regular dividend distributions, making them particularly attractive for investors with 5-10 year investment horizons.

Furthermore, value ETFs serve a critical portfolio function: they diversify risk by reducing concentration in fast-growing technology and innovation sectors that have dominated recent market performance. In a fragile geopolitical environment, this diversification provides essential downside protection.

Value ETF Options Worth Evaluating

Investors exploring value-oriented strategies have several established options:

• Vanguard Value ETF (VTV): Provides exposure to large-cap value stocks with broad market representation
• JPMorgan Active Value ETF (JAVA): Combines active management with value discipline
• Avantis U.S. Large Cap Value ETF (AVLV): Emphasizes quality factors within the value space
• iShares Russell Mid-Cap Value ETF (IWS): Targets mid-sized undervalued companies
• Vanguard Small Cap Value ETF (VBR): Captures small-cap value opportunities

Each vehicle offers different market-cap exposures, allowing investors to customize value exposure across their portfolio’s asset allocation.

Making the Strategic Decision

The current environment—marked by geopolitical uncertainty, inflation concerns, and stretched growth valuations—creates a compelling case for revisiting value investing. Whether through direct stock selection or more practical ETF vehicles, allocating capital toward fundamentally sound, undervalued securities offers a meaningful hedge against near-term volatility while maintaining long-term wealth accumulation potential.

Investors paying careful attention to risk management should seriously evaluate whether value strategies deserve increased portfolio weight in their allocation decisions.