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Is Invesco S&P SmallCap 600 Pure Value ETF (RZV) a Strong ETF Right Now?
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The Invesco S&P SmallCap 600 Pure Value ETF (RZV - Free Report) made its debut on 03/01/2006, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Small Cap Value category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by Invesco, and has been able to amass over $317.85 million, which makes it one of the average sized ETFs in the Style Box - Small Cap Value. Before fees and expenses, this particular fund seeks to match the performance of the S&P SmallCap 600 Pure Value Index.
The S&P SmallCap 600 Pure Value Index is narrow in focus, containing only those S&P SmallCap 600 companies with strong value characteristics as selected by Standard & Poors. As of December 31. 2010 the Index includes approximately 153 of the constituents that comprise the S&P SmallCap 600.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.35% for RZV, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.67%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Financials sector - about 20.80% of the portfolio. Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Veritiv Corp accounts for about 2.50% of total assets, followed by Consol Energy Inc (CEIX - Free Report) and Domtar Corp .
The top 10 holdings account for about 16.25% of total assets under management.
Performance and Risk
The ETF return is roughly 51.63% so far this year and it's up approximately 93.52% in the last one year (as of 11/02/2021). In the past 52-week period, it has traded between $53.60 and $99.72.
The ETF has a beta of 1.64 and standard deviation of 35.65% for the trailing three-year period, making it a high risk choice in the space. With about 168 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco S&P SmallCap 600 Pure Value ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 2000 Value ETF (IWN - Free Report) tracks Russell 2000 Value Index and the Vanguard SmallCap Value ETF (VBR - Free Report) tracks CRSP U.S. Small Cap Value Index. IShares Russell 2000 Value ETF has $16.47 billion in assets, Vanguard SmallCap Value ETF has $26.29 billion. IWN has an expense ratio of 0.24% and VBR charges 0.07%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Small Cap Value.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Is Invesco S&P SmallCap 600 Pure Value ETF (RZV) a Strong ETF Right Now?
The Invesco S&P SmallCap 600 Pure Value ETF (RZV - Free Report) made its debut on 03/01/2006, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Small Cap Value category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by Invesco, and has been able to amass over $317.85 million, which makes it one of the average sized ETFs in the Style Box - Small Cap Value. Before fees and expenses, this particular fund seeks to match the performance of the S&P SmallCap 600 Pure Value Index.
The S&P SmallCap 600 Pure Value Index is narrow in focus, containing only those S&P SmallCap 600 companies with strong value characteristics as selected by Standard & Poors. As of December 31. 2010 the Index includes approximately 153 of the constituents that comprise the S&P SmallCap 600.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.35% for RZV, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.67%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Financials sector - about 20.80% of the portfolio. Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Veritiv Corp accounts for about 2.50% of total assets, followed by Consol Energy Inc (CEIX - Free Report) and Domtar Corp .
The top 10 holdings account for about 16.25% of total assets under management.
Performance and Risk
The ETF return is roughly 51.63% so far this year and it's up approximately 93.52% in the last one year (as of 11/02/2021). In the past 52-week period, it has traded between $53.60 and $99.72.
The ETF has a beta of 1.64 and standard deviation of 35.65% for the trailing three-year period, making it a high risk choice in the space. With about 168 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco S&P SmallCap 600 Pure Value ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 2000 Value ETF (IWN - Free Report) tracks Russell 2000 Value Index and the Vanguard SmallCap Value ETF (VBR - Free Report) tracks CRSP U.S. Small Cap Value Index. IShares Russell 2000 Value ETF has $16.47 billion in assets, Vanguard SmallCap Value ETF has $26.29 billion. IWN has an expense ratio of 0.24% and VBR charges 0.07%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Small Cap Value.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.