Should Invesco S&P SmallCap 600 Pure Value ETF (RZV) Be on Your Investing Radar?
Looking for broad exposure to the Small Cap Value segment of the US equity market? You should consider the Invesco S&P SmallCap 600 Pure Value ETF (RZV), a passively managed exchange traded fund launched on 03/01/2006.
The fund is sponsored by Invesco. It has amassed assets over $235.80 million, making it one of the average sized 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.
Value stocks have lower than average price-to-earnings and price-to-book ratios. They 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
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.35%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.77%.
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.
This ETF has heaviest allocation to the Consumer Discretionary sector--about 30.90% of the portfolio. Industrials and Financials round out the top three.
Looking at individual holdings, Skywest Inc (SKYW) accounts for about 3.22% of total assets, followed by M/i Homes Inc (MHO) and Telephone And Data Systems Inc (TDS).
The top 10 holdings account for about 20.67% of total assets under management.
Performance and Risk
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 that exhibit strong value characteristics in the S&P SmallCap 600 Index.
The ETF has added about 5.13% so far this year and it's up approximately 13.79% in the last one year (as of 09/19/2023). In the past 52-week period, it has traded between $76.31 and $106.78.
The ETF has a beta of 1.48 and standard deviation of 26.57% for the trailing three-year period, making it a high risk choice in the space. With about 138 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco S&P SmallCap 600 Pure Value ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, RZV is a great option for investors seeking exposure to the Style Box - Small Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Russell 2000 Value ETF (IWN) and the Vanguard Small-Cap Value ETF (VBR) track a similar index. While iShares Russell 2000 Value ETF has $10.81 billion in assets, Vanguard Small-Cap Value ETF has $24.65 billion. IWN has an expense ratio of 0.24% and VBR charges 0.07%.
Bottom-Line
An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.
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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Invesco S&P SmallCap 600 Pure Value ETF (RZV): ETF Research Reports
Telephone and Data Systems, Inc. (TDS) : Free Stock Analysis Report
SkyWest, Inc. (SKYW) : Free Stock Analysis Report
M/I Homes, Inc. (MHO) : Free Stock Analysis Report
Vanguard Small-Cap Value ETF (VBR): ETF Research Reports
iShares Russell 2000 Value ETF (IWN): ETF Research Reports
