---
title: "U.S. value funds beat the S&P 500 over the past year, but the funds did not move together"
url: "https://etf.net/news/value-funds-beat-sp-500-unevenly-2026-10-21"
published_at: "2026-10-21T14:47:33.784Z"
updated_at: "2026-10-21T14:47:33.784Z"
byline: "ETF.net Research"
---

# U.S. value funds beat the S&P 500 over the past year, but the funds did not move together

The median fund gained 22.9% through Oct. 20, 2026, including dividends, while the best fund returned 55.1% and the weakest 11.6%.

By ETF.net Research. Published Oct 21, 2026.

The median U.S. value fund returned **22.9%** over the year through Tuesday, Oct. 20, 2026, including dividends, beating State Street SPDR S&P 500 ETF SPY by 7.1 percentage points. SPY returned 15.8%.

A holder did not get the median. Among the 40 funds in the category, iShares MSCI USA Value Factor ETF VLUE returned 55.1%, the best result, and VanEck Morningstar Wide Moat Value ETF MVAL returned 11.6%, the weakest. The spread is **43.5** percentage points, wider than the gap against the S&P 500.

## Technology, not the old sectors, led one value index

Ginger Perry, an investment research strategist at [State Street Investment Management](https://www.ssga.com/us/en/institutional/insights/mind-on-the-market-27-july-2026), and Dane Smith, the firm's head of North American investment strategy and research, wrote in July:

"Value is winning, and not for the reason most investors think."

The note covers the Russell 1000 Value Index through July 21, 2026, not the 40 funds through Oct. 20. As of that day the index had outperformed the Russell 1000 Growth Index by roughly 15% for 2026, they said, citing FactSet.

State Street said the index still overweights financials, health care, consumer staples and energy, which would lead an investor to expect those sectors to drive the return. Technology, they said, was the largest contributor instead.

Through July 21, technology stocks in the index had returned 71.8% for 2026, and financials roughly 6%, State Street said.

The way a technology company gets into that index is a comparison, not a change in the business. [FTSE Russell](https://www.lseg.com/en/insights/ftse-russell/growth-value-or-both-key-style-shifts-in-the-june-2026-russell-reconstitution) scores each large U.S. company against the others.

Value is book value relative to the share price. Growth is expected earnings growth over the next two years and sales per share over the past five. A company can be partly in each index, and the two weights add up to the whole company.

State Street said technology's weight in the Russell 1000 Value Index rose from 3.7% to roughly 18.6% over the 20 years through June 30, 2026. The value label, the firm said, had come to include older technology companies and technology names that had moved toward value, alongside the traditional cyclical and defensive businesses.

This June's reconstitution pushed three of the largest companies further in. FTSE Russell assigned 92% of Amazon to the value index, up from 27% a year earlier. Apple, previously entirely in the growth index, was assigned 46% to value, and Microsoft was split in half.

FTSE Russell said those companies' own characteristics had been relatively stable, and that the change came from how they compared with the rest of the large-cap universe. Morningstar reported in September that technology was already almost 20% of the index before those additions. Amazon, Apple and Microsoft did not cause the rise in the sector's weight.

The fund shows where that left a holder. As of June 30, [iShares](https://www.ishares.com/us/literature/fact-sheet/iwd-ishares-russell-1000-value-etf-fund-fact-sheet-en-us.pdf) reported Amazon, Apple and Microsoft as the three largest holdings of iShares Russell 1000 Value ETF IWD, at 5.9%, 5.4% and 3.9%. Information technology was 18.6% of the fund, in line with the index weight State Street reported. Financials, still slightly larger, were 19.1%.

## The largest fund held different stocks

Vanguard Morningstar Value ETF VTV is the largest fund in the group. Vanguard says it tracks the Morningstar US Large Cap Value Index. IWD tracks the Russell 1000 Value Index.

Over the year through Oct. 20, IWD returned 27.7% and VTV returned 22.5%, a gap of 5.2 percentage points.

The holdings on June 30, 2026, show two definitions of value. [Vanguard](https://fund-docs.vanguard.com/FA0966_MX.pdf) reported Micron Technology as VTV's largest holding, at 4.9%. Amazon, Apple and Microsoft were not among its 10 largest holdings. IWD had those three at the top.

## Matching a sector is not a limit on one stock

VLUE tracks the MSCI USA Enhanced Value Index. MSCI says the index mirrors the sector weights of the broad market it is drawn from, then tilts toward cheaper stocks inside each sector.

That is a rule about sectors. It is not a cap on one company.

As of June 30, [iShares reported](https://www.ishares.com/us/literature/fact-sheet/vlue-ishares-msci-usa-value-factor-etf-fund-fact-sheet-en-us.pdf) technology at 41.8% of the fund and Micron at 24.5%.

Morningstar's Brendan McCann wrote on July 1, 2026, that the stake followed those rules. Technology was roughly 40% of the parent index before its May 2026 rebalance, so the value index needed about the same. Nvidia, Apple and Microsoft fill much of that technology weight, and the value index holds none of them, he wrote, so cheaper technology stocks have to fill the sector.

Micron qualified on a forward price-to-earnings ratio, McCann wrote, because its projected earnings had risen even more than its share price. The index does not cap a single stock.

Micron's shares rose 214% from the end of 2025 through Oct. 20. Over that same stretch, VLUE returned 43.5%, including dividends. The return for the year through Oct. 20, back to the same date in 2025, was 55.1%, the best in the category.

MVAL is the other design in that range. It tracks an index of companies Morningstar judges to be attractively priced, with sustainable competitive advantages. It returned 11.6% over the year, behind SPY.

Chart: **VLUE** led; MVAL trailed the S&P 500

## Large-cap value rose in the quarter, and small-cap value fell

From June 30 to Sept. 30, 2026, the median fund fell 0.2% while SPY rose 2.4%.

[FTSE Russell](https://www.lseg.com/content/dam/ftse-russell/en_us/documents/market-insights/russell-us-index-spotlight/us-russell-quarterly-spotlight-q3-2026.pdf) reported that the Russell 1000 Value Index returned 2.6% in the quarter, against 0.9% for the Russell 1000 Growth Index. The Russell 2000 Value Index declined 4.9%, against a 9.4% decline for the Russell 2000 Growth Index.

Value beat growth at both sizes. The small-cap value index still fell.

The firm also said value indexes have taken on more technology, a shift the June reconstitution reinforced. IWD returned 2.6% in the quarter, matching its index. VTV fell 0.4%, and so did VLUE, whose technology weight was 41.8% at the end of June.

Chart: **IWD** rose; VTV and VLUE fell

A holder of a U.S. value fund did not own one bet over that year. The median fund beat the S&P 500.

Technology was the largest contributor to the Russell 1000 Value Index through late July, after a 20-year rise in that sector's weight. By June 30, a fund tracking the index held Amazon, Apple and Microsoft as its largest positions.

A fund built to match the market's sector weights could still hold about a quarter of its assets in Micron, as VLUE did at midyear. MVAL trailed the S&P 500.

The category name did not decide the year. The index each fund tracks did.

Source: etf.net, https://etf.net/news/value-funds-beat-sp-500-unevenly-2026-10-21. Please cite the page URL.