IVE carves out the cheaper half of the S&P 500 using a multi-factor value screen, giving you concentrated exposure to beaten-down blue chips and cyclical sectors that the market is currently pessimistic about.
How It Works
The fund uses S&P's value methodology which ranks stocks by book-to-price, earnings-to-price, and sales-to-price ratios. It takes the cheapest third of the S&P 500 by this composite score and weights them by market cap, typically resulting in heavy tilts toward financials, energy, and healthcare while underweighting tech growth stories.
Key Features
- Pure value play with ~350 stocks vs 500 in the parent index, concentrating your bet on cheap
- Costs just 0.18% annually, making it one of the cheapest ways to systematically buy unloved large-caps
- Rebalances annually in December, avoiding excessive trading while capturing value rotations
Risks
- Can underperform for years during growth rallies — lagged the S&P 500 by 4% annually from 2017-2020
- Heavy sector concentration means you're making implicit bets on banks, oil companies, and old-economy stocks
- Value traps exist — some stocks are cheap because they deserve to be, not because they're misunderstood
Who Should Own This
Best for contrarians who believe the market overshoots on both optimism and pessimism, and patient investors willing to wait for mean reversion. Works well as a 10-20% portfolio tilt for those overweight growth stocks, or as a core holding for value purists who think paying 30x earnings is insane.