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Is Invesco S&P SmallCap 600 Pure Value ETF (RZV) a Strong ETF Right Now?
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Making its debut on 03/01/2006, smart beta exchange traded fund Invesco S&P SmallCap 600 Pure Value ETF (RZV - Free Report) provides investors broad exposure to the Style Box - Small Cap Value category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide 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.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other 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 sponsored by Invesco. It has amassed assets over $284.86 million, making 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 measures the performance of securities that exhibit strong value characteristics in the S&P SmallCap 600 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 RZV, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 0.98%.
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.
For RZV, it has heaviest allocation in the Consumer Discretionary sector --about 20.40% of the portfolio --while Financials and Industrials round out the top three.
Taking into account individual holdings, Olympic Steel Inc (ZEUS - Free Report) accounts for about 1.77% of the fund's total assets, followed by Suncoke Energy Inc (SXC - Free Report) and Kelly Services Inc (KELYA - Free Report) .
The top 10 holdings account for about 13.66% of total assets under management.
Performance and Risk
Year-to-date, the Invesco S&P SmallCap 600 Pure Value ETF has lost about -6.65% so far, and is down about -1.49% over the last 12 months (as of 05/09/2022). RZV has traded between $85.50 and $105.17 in this past 52-week period.
The fund has a beta of 1.49 and standard deviation of 35.82% for the trailing three-year period, which makes RZV a high risk choice in this particular space. With about 173 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 $12.68 billion in assets, Vanguard SmallCap Value ETF has $24.97 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?
Making its debut on 03/01/2006, smart beta exchange traded fund Invesco S&P SmallCap 600 Pure Value ETF (RZV - Free Report) provides investors broad exposure to the Style Box - Small Cap Value category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide 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.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other 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 sponsored by Invesco. It has amassed assets over $284.86 million, making 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 measures the performance of securities that exhibit strong value characteristics in the S&P SmallCap 600 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 RZV, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 0.98%.
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.
For RZV, it has heaviest allocation in the Consumer Discretionary sector --about 20.40% of the portfolio --while Financials and Industrials round out the top three.
Taking into account individual holdings, Olympic Steel Inc (ZEUS - Free Report) accounts for about 1.77% of the fund's total assets, followed by Suncoke Energy Inc (SXC - Free Report) and Kelly Services Inc (KELYA - Free Report) .
The top 10 holdings account for about 13.66% of total assets under management.
Performance and Risk
Year-to-date, the Invesco S&P SmallCap 600 Pure Value ETF has lost about -6.65% so far, and is down about -1.49% over the last 12 months (as of 05/09/2022). RZV has traded between $85.50 and $105.17 in this past 52-week period.
The fund has a beta of 1.49 and standard deviation of 35.82% for the trailing three-year period, which makes RZV a high risk choice in this particular space. With about 173 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 $12.68 billion in assets, Vanguard SmallCap Value ETF has $24.97 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.