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Is Guggenheim S&P SmallCap 600 Pure Growth ETF (RZG) a Hot ETF Right Now?
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Launched on 03/01/2006, the Guggenheim S&P SmallCap 600 Pure Growth ETF (RZG - Free Report) is a smart beta exchange traded fund offering broad exposure to the Small Cap ETFs category of the U.S. equity market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by Invesco Powershares. RZG has been able to amass assets over $281.75 M, making it one of the average sized ETFs in the Small Cap ETFs. This particular fund seeks to match the performance of the S&P SmallCap 600 Pure Growth Index before fees and expenses.
The S&P SmallCap 600 Pure Growth Index is narrow in focus, containing only those S&P SmallCap 600 companies with strong growth characteristics as selected by Standard & Poors. As of December 31, 2010 the Index includes approximately 160 of the constituents that comprise the S&P SmallCap 600.
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 RZG, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 0.48%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
RZG's heaviest allocation is in the Healthcare sector, which is about 27.90% of the portfolio. Its Information Technology and Consumer Discretionary round out the top three.
When you look at individual holdings, Enanta Pharmaceuticals Inc (ENTA - Free Report) accounts for about 1.81% of the fund's total assets, followed by Biotelemetry Inc (BEAT - Free Report) and Qualys Inc (QLYS - Free Report) .
RZG's top 10 holdings account for about 14.67% of its total assets under management.
Performance and Risk
So far this year, the ETF return is roughly 7.14%, and it's up approximately 23.45% in the last one year (as of 05/25/2018). RZG has traded between $99 and $122.57 in the past 52-week period.
RZG has a beta of 1.10 and standard deviation of 17.35% for the trailing three-year period, which makes the fund a high choice in the space. With about 142 holdings, it effectively diversifies company-specific risk.
Alternatives
Guggenheim S&P SmallCap 600 Pure Growth ETF is a reasonable option for investors seeking to outperform the Small Cap ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Small-Cap Growth ETF (VBK - Free Report) tracks CRSP U.S. Small Cap Growth Index and the iShares Russell 2000 Growth ETF (IWO - Free Report) tracks Russell 2000 Growth Index. Vanguard Small-Cap Growth ETF has $7.71 B in assets, iShares Russell 2000 Growth ETF has $10.14 B. VBK has an expense ratio of 0.07% and IWO charges 0.24%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Small Cap ETFs.
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 Guggenheim S&P SmallCap 600 Pure Growth ETF (RZG) a Hot ETF Right Now?
Launched on 03/01/2006, the Guggenheim S&P SmallCap 600 Pure Growth ETF (RZG - Free Report) is a smart beta exchange traded fund offering broad exposure to the Small Cap ETFs category of the U.S. equity market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by Invesco Powershares. RZG has been able to amass assets over $281.75 M, making it one of the average sized ETFs in the Small Cap ETFs. This particular fund seeks to match the performance of the S&P SmallCap 600 Pure Growth Index before fees and expenses.
The S&P SmallCap 600 Pure Growth Index is narrow in focus, containing only those S&P SmallCap 600 companies with strong growth characteristics as selected by Standard & Poors. As of December 31, 2010 the Index includes approximately 160 of the constituents that comprise the S&P SmallCap 600.
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 RZG, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 0.48%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
RZG's heaviest allocation is in the Healthcare sector, which is about 27.90% of the portfolio. Its Information Technology and Consumer Discretionary round out the top three.
When you look at individual holdings, Enanta Pharmaceuticals Inc (ENTA - Free Report) accounts for about 1.81% of the fund's total assets, followed by Biotelemetry Inc (BEAT - Free Report) and Qualys Inc (QLYS - Free Report) .
RZG's top 10 holdings account for about 14.67% of its total assets under management.
Performance and Risk
So far this year, the ETF return is roughly 7.14%, and it's up approximately 23.45% in the last one year (as of 05/25/2018). RZG has traded between $99 and $122.57 in the past 52-week period.
RZG has a beta of 1.10 and standard deviation of 17.35% for the trailing three-year period, which makes the fund a high choice in the space. With about 142 holdings, it effectively diversifies company-specific risk.
Alternatives
Guggenheim S&P SmallCap 600 Pure Growth ETF is a reasonable option for investors seeking to outperform the Small Cap ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Small-Cap Growth ETF (VBK - Free Report) tracks CRSP U.S. Small Cap Growth Index and the iShares Russell 2000 Growth ETF (IWO - Free Report) tracks Russell 2000 Growth Index. Vanguard Small-Cap Growth ETF has $7.71 B in assets, iShares Russell 2000 Growth ETF has $10.14 B. VBK has an expense ratio of 0.07% and IWO charges 0.24%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Small Cap ETFs.
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.