Not All Value ETFs Are the Same. Here’s What Performance Can Tell Us
Exploring the differences between the CRSP and S&P value indexes.
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Growth stocks have dominated broad market indexes for much of the past decade, shaping not only portfolio returns but investor expectations. Many investors have grown accustomed to an environment where valuation appeared secondary to large and speculative opportunities.
Volatility has resurfaced, and the performance of growth exchange-traded funds has lagged in recent months. Periods like this tend to revive an interest in value investing. As attention shifts, so does the information that investors need to make informed decisions. Gaining exposure to “value” isn’t as straightforward as selecting a value-labeled ETF because there is much more going on beneath the surface.
Value in Modern Portfolios
Value is not a single, universally agreed-upon strategy. The way it is defined, measured, and implemented varies meaningfully across index providers and asset managers. ETFs may describe themselves as “value,” yet rely on different valuation metrics, weighting schemes, sector biases, and rebalancing rules, thus leading to different portfolios and outcomes.
Active value-oriented managers root their portfolios in fundamental analysis. They look for stocks whose prices are lower than what their businesses are believed to be worth. Analysts consider balance-sheet strength, competitors in the industry, and downside risk. Investment analysis is often specific to individual companies rather than broad groups of stocks.
Value investing in a passive form looks different. Passive value indexes do not estimate intrinsic value, nor do they assess business quality individually. ETFs that track broad value indexes use observable characteristics that can be measured, ranked, and rebalanced across a large universe of stocks. In practice, this means “value” is about stocks that appear inexpensive relative to certain financial metrics, such as book value, earnings, cash flow, or dividends.
The differences between using personal judgment and fundamental metrics are subtle but important. When value is implemented systematically, it is not defined by what an investor believes a company is worth. What matters is how that company compares with others using a predefined set of rules. These rules may be reasonable, well-researched, and historically grounded, but they are still choices, and different choices lead to different outcomes.
As a result, passive value investing is less about identifying individual opportunities and more about maintaining exposure to a broad set of stocks with similar valuation characteristics over time. The objective is not to be right about any single stock, but to consistently own a cohort of stocks that meet the strategy’s definition of “cheap” and allow the process to play out across market cycles.
The term “value” can encompass a wide range of approaches. Once value investing was able to be defined by a set of rules, the question shifted from whether value exists to how it is defined and expressed.
A Line in the Sand vs. Open to All
Defining “cheap” is among the most important design choices. Two common but different value ETFs investors may encounter are Vanguard Value ETF
VTV
Valuation Metrics
The way the metrics are combined, scored, and translated into portfolio weights varies meaningfully, but they have some things in common. CRSP and S&P divide a broad universe of stocks into distinct value and growth segments, and they recognize that some stocks do not purely fit into either segment. Those in the middle aren’t that cheap, but they aren’t that expensive, either.
The indexes differ in how they treat these middling stocks. CRSP divides stocks into separate growth and value indexes. Even when a stock lands within the middle ground, it is included in the index to which it tilts closer. CRSP allows almost no overlap between the growth and value indexes, meaning a stock cannot exist in both indexes at the same time.
This approach produces a smoother, more stable portfolio. Changes at reconstitution tend to be incremental, allowing companies to migrate over multiple quarters as their fundamentals evolve. As a result, CRSP’s value indexes typically experience lower turnover and fewer abrupt shifts in holdings. The trade-off is that the value index may be less agile in including undervalued stocks as they migrate from the growth side of the market.
The S&P value indexes, by contrast, employ a more inclusive style classification framework. Stocks are ranked based on value and growth characteristics separately, then assigned to the value index if they score high on value metrics and low on growth metrics. Stocks that land in the middle are handled differently from CRSP. This means that stocks with modest growth and value characteristics could be included in both value and growth indexes.
S&P’s methodology often produces more turnover at both the stock and sector levels. When valuation spreads are wide or prices are moving quickly, the composition of the S&P value indexes may diverge more sharply from others like CRSP.
Neither framework is inherently better or worse. CRSP prioritizes continuity and stability, while S&P emphasizes changing the portfolio’s sector and stock allocation as needed. What matters for investors is recognizing that these approaches reflect different interpretations of the same idea and that the definition of “cheap” embedded in a value index plays a central role in how that fund performs through different market conditions.
What Performance Can Tell Us
Looking back over the past decade, the performance differences between value ETFs built on the CRSP or S&P methodology help illustrate why methodology matters. While both Vanguard Value ETF and State Street SPDR Portfolio S&P 500 Value ETF have broadly moved in line with the value factor, the path they took differed.
In extended growth-led environments, value strategies as a group underperformed the broader market. During these periods, S&P-based SPYV lagged CRSP-based VTV most of the time. However, State Street SPDR Portfolio S&P 500 Value ETF has the ability to hold growth stocks that have fallen from grace much faster than Vanguard Value ETF when valuations make sense. Holding former growth stocks at the right time means that the State Street fund can have explosive periods of outperformance or underperformance relative to the Vanguard fund. This effect can be seen in the chart below, which shows the excess return of State Street SPDR Portfolio S&P 500 Value ETF benchmarked against Vanguard Value ETF over the past 10 years.
Excess Returns of SPYV Benchmarked to VTV
State Street SPDR Portfolio S&P 500 Value outperformed Vanguard Value over two short periods. Both followed drawdowns in growthier stocks. These drawdowns allowed the State Street ETF to buy into growth stocks trading at attractive valuations and wait for a recovery. After those stocks had regained their steep valuations, the portfolio kicked them out at its annual reconstitution. This captures some upside while limiting the downside of overvalued stocks.
Looking at holdings in 2023 and 2026 for these ETFs confirms what the methodology targets. Vanguard Value’s top holdings have mostly stayed the same. It focuses on large, stable companies that represent value characteristics. State Street SPDR Portfolio S&P 500 Value, on the other hand, has changed substantially.
Past and Present Largest Holdings
Despite differences in holdings and periods of outperformance, the strategies produced roughly the same return for investors over the past 10 years. From the beginning of 2016 through 2025, both ETFs produced a total return of 11.67%. Volatility, drawdowns, and periods of under- and outperformance varied, but both worked as expected after accounting for the market environment.
Play the Long Game
It may be tempting to try timing exposure to one ETF or another as the market evolves. But it’s important to realize that differences appear for a short period and they tend to wash out over longer periods.
Value ETFs may share a label, but they do not share a single definition, construction, or investment experience. The comparison between Vanguard Value and State Street SPDR Portfolio S&P 500 Value highlights this reality. Both ETFs seek to capture the value factor, yet their underlying index methodologies differ meaningfully in how value is defined, scored, and implemented. Those design choices drive differences in holdings, turnover, and sensitivity to changing market conditions. As shown over the past decade, these differences can lead to distinct paths while still producing similar long-term results.
Selecting a value ETF is not simply a style decision, but a structural one. Understanding the rules embedded in an ETF helps set expectations during periods of under- or outperformance, and the impact that sticking with a strategy through a full market cycle can have. In value investing, patience is a prerequisite.
Editor’s Note: One or more of the Vanguard funds mentioned in this report track an index created or licensed by Morningstar.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
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