"Large-cap value, active small-cap value, and passive small-cap value benchmarks are all pulling ahead of the Nasdaq 100 year to date, and three funds offer direct ways to express the rotation: the iShares MSCI USA Value Factor ETF ( NYSEARCA:VLUE | VLUE Price Prediction), the Avantis U.S. Small Cap Value ETF ( NYSEARCA:AVUV), and the Vanguard Small-Cap Value Index Fund ETF Shares ( NYSEARCA:VBR)."
"The performance gap has widened sharply this spring. VLUE is up 26% year to date, AVUV 16%, and VBR 10%, while the growth-heavy Invesco QQQ Trust ( NASDAQ:QQQ) has gained 11% over the same stretch. The 10-year Treasury yield sits near 4.5%, in the 92nd percentile of its 12-month range, a setting that has historically pressured the long-duration cash flows of mega-cap growth and rewarded shorter-duration profit streams trading at lower multiples."
"Value-versus-growth head fakes have been common since the pandemic, but the 2026 backdrop looks structurally different. Yields have stopped falling; the 10-year minus 2-year Treasury spread is 0.50% after compressing from a February peak of 0.74%; and capital is flowing toward companies with current earnings rather than promised earnings. Steeper curves tend to favor cyclically sensitive value names, and the modest steepening that began in late 2025 has been enough to shift relative performance."
"VLUE tracks the MSCI USA Enhanced Value Index, which selects the cheapest stocks within each sector based on price-to-book, forward price-to-earnings, and enterprise value-to-cash flow. The sector-relative construction is the key feature. Rather than tilting th"
Large-cap value, active small-cap value, and passive small-cap value benchmarks are outperforming the Nasdaq 100 year to date. VLUE is up 26% year to date, AVUV is up 16%, and VBR is up 10%, while QQQ is up 11% over the same period. The 10-year Treasury yield is near 4.5% and has historically pressured long-duration cash flows associated with mega-cap growth while rewarding shorter-duration profit streams. The rotation is supported by yields no longer falling, a 10-year minus 2-year spread around 0.50% after compression, and capital flowing toward companies with current earnings rather than promised earnings. Steeper curves favor cyclically sensitive value names, and modest steepening beginning in late 2025 shifted relative performance. VLUE, AVUV, and VBR provide different implementations across the market-cap spectrum.
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