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Is Invesco S&P MidCap 400 Pure Value ETF (RFV) a Strong ETF Right Now?
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Making its debut on 03/01/2006, smart beta exchange traded fund Invesco S&P MidCap 400 Pure Value ETF (RFV - Free Report) provides investors broad exposure to the Style Box - Mid Cap Value category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by Invesco. RFV has been able to amass assets over $242.32 million, making it one of the average sized ETFs in the Style Box - Mid Cap Value. Before fees and expenses, RFV seeks to match the performance of the S&P MidCap 400 Pure Value Index.
The S&P MidCap 400 Pure Value Index measures the performance of securities that exhibit strong value characteristics in the S&P MidCap 400 Index.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.35% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.59%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For RFV, it has heaviest allocation in the Consumer Discretionary sector --about 35.70% of the portfolio --while Financials and Information Technology round out the top three.
Taking into account individual holdings, United States Steel Corp (X - Free Report) accounts for about 4.35% of the fund's total assets, followed by Taylor Morrison Home Corp (TMHC - Free Report) and Goodyear Tire & Rubber Co/the (GT - Free Report) .
Its top 10 holdings account for approximately 34.3% of RFV's total assets under management.
Performance and Risk
So far this year, RFV has gained about 8.87%, and is up about 7.30% in the last one year (as of 11/09/2023). During this past 52-week period, the fund has traded between $88.36 and $109.34.
The ETF has a beta of 1.44 and standard deviation of 23.32% for the trailing three-year period, making it a high risk choice in the space. With about 68 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco S&P MidCap 400 Pure Value ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell Mid-Cap Value ETF (IWS - Free Report) tracks Russell MidCap Value Index and the Vanguard Mid-Cap Value ETF (VOE - Free Report) tracks CRSP U.S. Mid Cap Value Index. IShares Russell Mid-Cap Value ETF has $11.61 billion in assets, Vanguard Mid-Cap Value ETF has $14.75 billion. IWS has an expense ratio of 0.23% and VOE 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 - Mid 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 MidCap 400 Pure Value ETF (RFV) a Strong ETF Right Now?
Making its debut on 03/01/2006, smart beta exchange traded fund Invesco S&P MidCap 400 Pure Value ETF (RFV - Free Report) provides investors broad exposure to the Style Box - Mid Cap Value category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by Invesco. RFV has been able to amass assets over $242.32 million, making it one of the average sized ETFs in the Style Box - Mid Cap Value. Before fees and expenses, RFV seeks to match the performance of the S&P MidCap 400 Pure Value Index.
The S&P MidCap 400 Pure Value Index measures the performance of securities that exhibit strong value characteristics in the S&P MidCap 400 Index.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.35% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.59%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For RFV, it has heaviest allocation in the Consumer Discretionary sector --about 35.70% of the portfolio --while Financials and Information Technology round out the top three.
Taking into account individual holdings, United States Steel Corp (X - Free Report) accounts for about 4.35% of the fund's total assets, followed by Taylor Morrison Home Corp (TMHC - Free Report) and Goodyear Tire & Rubber Co/the (GT - Free Report) .
Its top 10 holdings account for approximately 34.3% of RFV's total assets under management.
Performance and Risk
So far this year, RFV has gained about 8.87%, and is up about 7.30% in the last one year (as of 11/09/2023). During this past 52-week period, the fund has traded between $88.36 and $109.34.
The ETF has a beta of 1.44 and standard deviation of 23.32% for the trailing three-year period, making it a high risk choice in the space. With about 68 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco S&P MidCap 400 Pure Value ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell Mid-Cap Value ETF (IWS - Free Report) tracks Russell MidCap Value Index and the Vanguard Mid-Cap Value ETF (VOE - Free Report) tracks CRSP U.S. Mid Cap Value Index. IShares Russell Mid-Cap Value ETF has $11.61 billion in assets, Vanguard Mid-Cap Value ETF has $14.75 billion. IWS has an expense ratio of 0.23% and VOE 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 - Mid 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.