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Should Invesco S&P MidCap 400 Pure Value ETF (RFV) Be on Your Investing Radar?

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Launched on 03/01/2006, the Invesco S&P MidCap 400 Pure Value ETF (RFV - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Mid Cap Value segment of the US equity market.

The fund is sponsored by Invesco. It has amassed assets over $202.03 million, making it one of the average sized ETFs attempting to match the Mid Cap Value segment of the US equity market.

Why Mid Cap Value

Compared to large and small cap companies, mid cap businesses tend to have higher growth prospects and are less volatile, respectively, with market capitalization between $2 billion and $10 billion. These types of companies, then, have a good balance of stability and growth potential.

Value stocks are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their lower than average sales and earnings growth rates. While value stocks have outperformed growth stocks in nearly all markets when you consider long-term performance, growth stocks are more likely to outpace value stocks in strong bull markets.

Costs

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.

Annual operating expenses for this ETF are 0.35%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.05%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Financials sector--about 34.80% of the portfolio. Consumer Discretionary and Information Technology round out the top three.

Looking at individual holdings, Telephone And Data Systems Inc (TDS - Free Report) accounts for about 2.18% of total assets, followed by Avnet Inc (AVT - Free Report) and World Fuel Services Corp (INT - Free Report) .

The top 10 holdings account for about 18.79% of total assets under management.

Performance and Risk

RFV seeks to match the performance of the S&P MidCap 400 Pure Value Index before fees and expenses. The S&P Midcap 400 Pure Value Index is narrow in focus, containing only those S&P Midcap 400 companies with strong value characteristics as selected by Standard & Poors. As of December 31, 2010, the Index includes approximately 93 of the constituents that comprise the S&P Midcap 400.

The ETF return is roughly 34.76% so far this year and is up about 89.25% in the last one year (as of 05/28/2021). In the past 52-week period, it has traded between $48.30 and $98.31.

The ETF has a beta of 1.66 and standard deviation of 33.14% for the trailing three-year period, making it a high risk choice in the space. With about 108 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco S&P MidCap 400 Pure Value ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, RFV is a great option for investors seeking exposure to the Style Box - Mid Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.

The Vanguard MidCap Value ETF (VOE - Free Report) and the iShares Russell MidCap Value ETF (IWS - Free Report) track a similar index. While Vanguard MidCap Value ETF has $14.29 billion in assets, iShares Russell MidCap Value ETF has $14.31 billion. VOE has an expense ratio of 0.07% and IWS charges 0.24%.

Bottom-Line

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

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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