Back to top

Image: Bigstock

Should SPDR S&P 600 Small Cap Value ETF (SLYV) Be on Your Investing Radar?

Read MoreHide Full Article

Looking for broad exposure to the Small Cap Value segment of the US equity market? You should consider the SPDR S&P 600 Small Cap Value ETF (SLYV - Free Report) , a passively managed exchange traded fund launched on 09/25/2000.

The fund is sponsored by State Street Global Advisors. It has amassed assets over $3.76 billion, making it one of the larger 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.

Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have 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

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.

Annual operating expenses for this ETF are 0.15%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 2.29%.

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 25.80% of the portfolio. Industrials and Consumer Discretionary round out the top three.

Looking at individual holdings, Lincoln National Corp (LNC - Free Report) accounts for about 0.90% of total assets, followed by Alaska Air Group Inc (ALK - Free Report) and Advance Auto Parts Inc (AAP - Free Report) .

The top 10 holdings account for about 8.12% of total assets under management.

Performance and Risk

SLYV seeks to match the performance of the S&P SmallCap 600 Value Index before fees and expenses. The S&P SmallCap 600 Value Index measures the performance of the small-capitalization value sector in the U.S. equity market. The selection universe for the S&P SmallCap 600 Index includes all U.S. common equities listed on the NYSE, NASDAQ Global Select Market, NASDAQ Select Market and NASDAQ Capital Market with market capitalizations between $250 million and $1.2 billion.

The ETF has lost about -4.96% so far this year and it's up approximately 10.71% in the last one year (as of 05/30/2024). In the past 52-week period, it has traded between $66.67 and $84.55.

The ETF has a beta of 1.18 and standard deviation of 22.03% for the trailing three-year period, making it a medium risk choice in the space. With about 462 holdings, it effectively diversifies company-specific risk.

Alternatives

SPDR S&P 600 Small Cap 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, SLYV 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 - Free Report) and the Vanguard Small-Cap Value ETF (VBR - Free Report) track a similar index. While iShares Russell 2000 Value ETF has $11.52 billion in assets, Vanguard Small-Cap Value ETF has $27.80 billion. IWN has an expense ratio of 0.24% and VBR charges 0.07%.

Bottom-Line

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

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.

Published in