Should Invesco S&P SmallCap 600 Pure Value ETF (RZV) Be on Your Investing Radar?
Style Box ETF report for RZV
If you're interested in broad exposure to the Small Cap Value segment of the US equity market, look no further than 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 $279.48 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.
While 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.
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
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 0.71%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Financials sector--about 20.10% of the portfolio. Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Veritiv Corp (VRTV) accounts for about 2.50% of total assets, followed by Consol Energy Inc (CEIX) and Domtar Corp (UFS).
The top 10 holdings account for about 16.25% 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 is narrow in focus, containing only those S&P SmallCap 600 companies with strong value characteristics as selected by Standard & Poors. As of December 31. 2010 the Index includes approximately 153 of the constituents that comprise the S&P SmallCap 600.
The ETF return is roughly 43.23% so far this year and was up about 84.75% in the last one year (as of 09/29/2021). In the past 52-week period, it has traded between $50.59 and $99.72.
The ETF has a beta of 1.71 and standard deviation of 35.63% for the trailing three-year period, making it a high risk choice in the space. With about 168 holdings, it effectively diversifies company-specific risk.
Invesco S&P SmallCap 600 Pure 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, RZV is a good 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) and the Vanguard SmallCap Value ETF (VBR) track a similar index. While iShares Russell 2000 Value ETF has $15.63 billion in assets, Vanguard SmallCap Value ETF has $24.54 billion. IWN has an expense ratio of 0.24% and VBR charges 0.07%.
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.
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Invesco S&P SmallCap 600 Pure Value ETF (RZV): ETF Research Reports
Domtar Corporation (UFS): Free Stock Analysis Report
Veritiv Corporation (VRTV): Free Stock Analysis Report
Vanguard SmallCap Value ETF (VBR): ETF Research Reports
iShares Russell 2000 Value ETF (IWN): ETF Research Reports
Consol Energy Inc. (CEIX): Free Stock Analysis Report
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