Should SPDR S&P 600 Small Cap Value ETF (SLYV) Be on Your Investing Radar?
Designed to provide broad exposure to the Small Cap Value segment of the US equity market, the SPDR S&P 600 Small Cap Value ETF (SLYV) is 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 $3.71 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
Small cap companies have market capitalization below $2 billion. They usually have higher potential than large and mid cap companies with stocks but 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. Considering long-term performance, value stocks have outperformed growth stocks in almost all markets; however, they are more likely to underperform growth 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 0.15%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 2.43%.
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 19.50% of the portfolio. Consumer Discretionary and Industrials round out the top three.
Looking at individual holdings, Meritage Homes Corp (MTH) accounts for about 1.07% of total assets, followed by Insight Enterprises Inc (NSIT) and Radian Group Inc (RDN).
The top 10 holdings account for about 7.57% 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 gained about 1.59% so far this year and was up about 4.39% in the last one year (as of 09/19/2023). In the past 52-week period, it has traded between $67.14 and $86.64.
The ETF has a beta of 1.19 and standard deviation of 23.53% for the trailing three-year period, making it a medium risk choice in the space. With about 458 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR S&P 600 Small Cap Value ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, SLYV is an outstanding 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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SPDR S&P 600 Small Cap Value ETF (SLYV): ETF Research Reports
Radian Group Inc. (RDN) : Free Stock Analysis Report
Meritage Homes Corporation (MTH) : Free Stock Analysis Report
Insight Enterprises, Inc. (NSIT) : Free Stock Analysis Report
Vanguard Small-Cap Value ETF (VBR): ETF Research Reports
iShares Russell 2000 Value ETF (IWN): ETF Research Reports
