Market Style Box – The Invesco S&P Small Cap 600 Pure Value ETF (RZV – Free Report) is a smart beta exchange traded fund launched on March 1, 2006.
What are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization-weighted indices designed to represent a market or specific segments of a market.
Market capitalization weighted indices are suitable for investors who believe in market efficiency as they provide a low-cost, convenient and transparent way to replicate market returns.
However, some investors believe they can beat the market with good stock selection. This group may invest in another class of funds called smart betas that track non-cap weighted strategies.
These indices seek to select stocks with high potential for risk and return performance based on certain underlying characteristics or combinations of such characteristics.
This space offers investors many options, including the simplest equal weighting, fundamental weighting, and volatility/momentum based weighting methods, but not all of these strategies deliver excellent results.
Fund Sponsor & Index
This fund is managed by Invesco. RZV has been able to accumulate over $307.89 million in assets, making him one of the ETFs, Small Cap Value, the average size of the Style Box. 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 measures the performance of securities exhibiting strong value characteristics in the S&P SmallCap 600 Index.
Expenses and Other Expenses
Investors should also pay attention to the ETF’s expense ratio. Assuming all other metrics are equal, low-cost products produce better results than high-cost products.
This ETF is on par with most similar products in this space with an annual operating cost of 0.35%.
The 12-month trailing dividend yield is 1.31%.
Sector exposure and top holdings
ETFs offer diversified exposure, thus minimizing single-stock risk, but it is still important to delve into fund holdings before investing. Most ETFs are highly transparent products. and many disclose their holdings daily.
At 28.30% of the portfolio, the fund is most heavily allocated to the consumer discretionary sector. Industrials and financials round out the top three.
Considering personal ownership, M/i Homes Inc (MHOs – Free Report) accounted for approximately 1.58% of the fund’s total assets, followed by Genworth Financial Inc (GNW – Free Report) and Kelly Services Inc (Keriya – free report).
The holdings of the top 10 stocks represent approximately 13.08% of RZV’s total assets under management.
performance and risk
The ETF is up about 9.51% so far this year and is down about -1.10% over the past year (as of January 18, 2023). RZV has traded between $76.31 and $99.34 over the last 52 weeks.
The ETF has a beta of 1.44 and a standard deviation of 36.63% over the past three years, making it a riskier option in this space. It holds approximately 151 shares and effectively diversifies company-specific risks.
The Invesco S&P SmallCap 600 Pure Value ETF is a reasonable option for investors looking to outperform the Style Box – Small Cap Value segment of the market. However, there are other areas of his ETFs that investors can consider.
IShares Russell 2000 Value ETF (IWN – Free Report) is the Russell 2000 Value Index and the Vanguard SmallCap Value ETF (VBR – Free Report) tracks the CRSP US Small Cap Value Index. The IShares Russell 2000 Value ETF has $12.61 billion in assets and the Vanguard SmallCap Value ETF has $25.11 billion in assets. The IWN expense ratio is 0.23% and the VBR fee is 0.07%.
Investors looking for a cheaper, less risky option should consider a traditional market cap weighted ETF that aims to match the returns of Style Box – Small Cap Value.
Visit the Zacks ETF Center to learn more about this and other ETFs, select products that match your investment objectives, and read articles on the latest developments in the ETF investment universe.