Launched on 03/01/2006, the Invesco S&P SmallCap 600 Pure Value ETF (
RZV Quick Quote RZV - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Small Cap Value segment of the US equity market.
The fund is sponsored by Invesco. It has amassed assets over $286.84 million, making it one of the average sized ETFs attempting to match the Small Cap Value segment of the US equity market.
Why Small Cap Value
There's a lot of potential to investing in small cap companies, but with market capitalization below $2 billion, that high potential comes with even higher risk.
Value stocks have lower than average price-to-earnings and price-to-book ratios. They also have lower than average sales and earnings growth rates. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
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 0.58%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Financials sector--about 20% of the portfolio. Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Veritiv Corp (
VRTV Quick Quote VRTV - Free Report) accounts for about 2.50% of total assets, followed by Consol Energy Inc ( CEIX Quick Quote CEIX - Free Report) and Domtar Corp ( UFS Quick Quote UFS - Free Report) .
The top 10 holdings account for about 16.25% of total assets under management.
Performance and Risk
RZV seeks to match the performance of the S&P SmallCap 600 Pure Value Index before fees and expenses. 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.
The ETF has added about 42.38% so far this year and is up about 76.26% in the last one year (as of 09/01/2021). In the past 52-week period, it has traded between $49.58 and $99.72.
The ETF has a beta of 1.71 and standard deviation of 35.48% 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.
Invesco S&P SmallCap 600 Pure Value ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, RZV is a reasonable option for those seeking exposure to the Style Box - Small Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 2000 Value ETF (
IWN Quick Quote IWN - Free Report) and the Vanguard SmallCap Value ETF ( VBR Quick Quote VBR - Free Report) track a similar index. While iShares Russell 2000 Value ETF has $15.80 billion in assets, Vanguard SmallCap Value ETF has $24.85 billion. IWN has an expense ratio of 0.24% and VBR charges 0.07%. Bottom-Line
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are 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.