Prediction: U.S. Value Stocks Will Outperform for 10 Years. Which ETFs Should You Buy?
2026-07-21 18:30
•Ben Gran •The Motley Fool
•• •••••••• Axe Capital view
Why U.S. Value Stocks Matter for SA Investors Now
Vanguard’s forecast for U.S. value stocks could signal opportunities framed by the rand’s direction and local sector positioning.
Vanguard's call for a decade of outperformance by U.S. value and small-cap stocks is worth watching, especially through the lens of USD/ZAR. When the rand weakens, South African investors may find U.S. value ETFs more expensive, but a stronger rand could be a green light to buy. Domestically, financial stocks like Standard Bank and FirstRand trade on attractive valuations, resembling value plays but with a local twist and currency exposure. Given the volatile rand, U.S. value stocks can offer diversification but come at FX risk. Technology exposure within VFVA is interesting, but Naspers and Prosus remain preferred local tech proxies despite their own challenges. I’m cautious about jumping straight into U.S. small-cap value ETFs without a bullish view on the rand, yet a gradual build-up alongside domestic financials could balance the risk. A persistent rand depreciation would erode offshore returns, so watch the currency closely. this is just my opinion and not financial advice
Watch the rand’s trend; build exposure to Standard Bank and FirstRand while selectively adding U.S. value ETFs like VFVA if USD/ZAR shows signs of stability or decline. Avoid heavy small-cap U.S. value exposure for now due to currency risk.
- USD/ZAR
- Standard Bank
- FirstRand
- VFVA
- Rand depreciation eroding offshore returns
- US market shocks hitting growth and value stocks indiscriminately
6/10
Vanguard research forecasts that U.S. value stocks and small-cap stocks will outperform growth stocks over the next 10 years. The article compares two Vanguard ETFs for value stock exposure: the Vanguard Small-Cap Value ETF (VBR), a passively managed fund with ultra-low fees, and the Vanguard U.S. Value Factor ETF (VFVA), an actively managed alternative with broader market-cap exposure. Both funds have recently outperformed the S&P 500 and Nasdaq-100.
This article was originally published by The Motley Fool and has been adapted here for Axe Capital Trading News.
Publisher: The Motley Fool
Author: Ben Gran
Categories: Healthcare, Equities
Tickers: VBR, VFVA, BMY, CELGR, EOG, CRM, INTU, CI
Sentiment: Positive - The fund has delivered 9.51% average annual returns since inception, 27% annualized returns over the past year, and charges an ultra-low 0.05% expense ratio. It combines small-cap and value investing strategies aligned with Vanguard's bullish research forecast. The actively managed fund has delivered 10.96% annualized returns since inception and 16.9% over the past three years. It offers broader diversification across market caps with a lower P/E ratio (11.4) and has outperformed VBR since inception, though it charges a slightly higher 0.13% expense ratio.
Keywords: value stocks, small-cap stocks, ETF comparison, Vanguard research, long-term investment, market forecast
Insights:
- VBR: Positive: The fund has delivered 9.51% average annual returns since inception, 27% annualized returns over the past year, and charges an ultra-low 0.05% expense ratio. It combines small-cap and value investing strategies aligned with Vanguard's bullish research forecast.
- VFVA: Positive: The actively managed fund has delivered 10.96% annualized returns since inception and 16.9% over the past three years. It offers broader diversification across market caps with a lower P/E ratio (11.4) and has outperformed VBR since inception, though it charges a slightly higher 0.13% expense ratio.
- BMY: Neutral: Mentioned as a top holding in VFVA with 0.83% of the fund. Included as an example of recognizable healthcare stocks in the actively managed value fund, with no specific performance commentary.