Value ETF Selection Guide 2026: Finding the Best Fit for Your Investment Goals
🎯 How Should You Choose a Value ETF?
There is something that nearly every serious investor and analyst agrees on: the stock market is incredibly overvalued right now, especially when it comes to technology and AI stocks.
That is why smart investors are moving a portion of their portfolio into value stocks. This is exactly why value ETFs like SCHD and VTV are getting so much attention.
📊 Market Conditions: Why Value ETFs Now?
Current Market Characteristics
- AI and tech stocks surging
- Growth stock valuations at historical highs
- Continued expectations for rate cuts
In this environment, shifting funds to value stocks is a very rational choice. It is true that AI stocks and technology ETFs are booming like crazy everywhere you look. But that does not mean you should completely exit growth stocks.
💡 Suggestion: If you have 30-40% in growth, consider moving 10% of that to value.
🎯 ETF Selection Guide by Investment Goal
Goal 1: Broad Value Stock Exposure
Recommendation: VTV
Suitable Investors
- Those who believe value stocks will outperform long-term
- Those seeking broad diversification
- Those less focused on dividend yield
VTV Advantages
- Wide diversification with 300+ holdings
- Pure value-based stock selection
- Lower expense ratio (0.04%)
Goal 2: Income-Focused Investing
Recommendation: SCHD
Suitable Investors
- Those who prioritize dividend income
- Those approaching or in retirement
- Those seeking higher current yield
SCHD Advantages
- High dividend yield of approximately 3.8%
- Stocks filtered by dividend quality
- Provides stable cash flow
📈 Investment Strategy Suggestions for 2026
Basic Principles
What I suggest at this point is to move slightly away from growth stocks toward value stocks.
Portfolio Adjustment Example
- Before: Growth 40% / Value 20% / Other 40%
- After: Growth 30% / Value 30% / Other 40%
Strategy for Using Both ETFs Together
If you do not care much about dividends at this point, you might be able to achieve better diversification by investing in two ETFs rather than just one.
Split Investment Example
- VTV: 60% (broad value exposure)
- SCHD: 40% (dividend income capture)
👤 Final Recommendations by Investor Type
Type A: Long-Term Growth Seeker
Profile
- Investment horizon: 10-20 years
- Risk tolerance: Moderate
- Goal: Asset appreciation + some income
Recommendation: Prefer VTV
- Broader diversification
- Probably higher price appreciation
- However, lower long-term dividends and cash flow
Type B: Income-Priority Investor
Profile
- Prioritizes income
- Wants solid value
- Aims to mitigate risk by minimizing tech exposure
- Less tax concerns using retirement accounts
Recommendation: Prefer SCHD
- High dividend yield
- Stable cash flow
- Minimal technology exposure
🔮 Future Outlook
SCHD has underperformed in the short term, but this is actually quite normal given the very purpose for which this fund was created.
Scenarios to Watch
- When tech and AI stocks stall or decline
- As rate cuts continue
- Rising preference for safe assets like SCHD
Especially if rates keep getting cut, there is a high chance money will flow into moderately safe investments that offer close to 4% in dividends.
💡 Key Summary
| Goal | Recommended ETF | Key Reason |
|---|---|---|
| Broad Value Exposure | VTV | 300+ stocks, pure value |
| High Dividend Income | SCHD | 3.8% yield, quality filter |
| Maximum Diversification | VTV + SCHD | Synergy with 12% overlap |
If you believe value investing will perform well over the next 5-10 years, now is a good time to review and adjust your portfolio. In the next article, we will cover tax optimization strategies by account type.