Should Invesco S&P SmallCap 600 Revenue ETF (RWJ) Be on Your Investing Radar?
Style Box ETF report for RWJ
Designed to provide broad exposure to the Small Cap Blend segment of the US equity market, the Invesco S&P SmallCap 600 Revenue ETF (RWJ) is a passively managed exchange traded fund launched on 02/22/2008.
The fund is sponsored by Invesco. It has amassed assets over $743.77 million, making it one of the average sized ETFs attempting to match the Small Cap Blend segment of the US equity market.
Why Small Cap Blend
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.
Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.39%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.53%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, 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 24% of the portfolio. Industrials and Consumer Staples round out the top three.
Looking at individual holdings, United Natural Foods Inc (UNFI) accounts for about 3.31% of total assets, followed by Pbf Energy Inc (PBF) and Macy's Inc (M).
The top 10 holdings account for about 18.88% of total assets under management.
Performance and Risk
RWJ seeks to match the performance of the OFI Revenue Weighted Small Cap Index before fees and expenses. The OFI Revenue Weighted Small Cap Index is constructed by re-weighting the constituent securities of the S&P SmallCap 600 Index according to the revenue earned by the companies in the S&P SmallCap 600 Index.
The ETF has gained about 53.81% so far this year and is up about 53.75% in the last one year (as of 12/08/2021). In the past 52-week period, it has traded between $78.66 and $130.08.
The ETF has a beta of 1.40 and standard deviation of 34.56% for the trailing three-year period, making it a high risk choice in the space. With about 597 holdings, it effectively diversifies company-specific risk.
Invesco S&P SmallCap 600 Revenue 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, RWJ is a sufficient option for those seeking exposure to the Style Box - Small Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 2000 ETF (IWM) and the iShares Core S&P SmallCap ETF (IJR) track a similar index. While iShares Russell 2000 ETF has $69.39 billion in assets, iShares Core S&P SmallCap ETF has $73.61 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds 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 Revenue ETF (RWJ): ETF Research Reports
Macy's, Inc. (M): Free Stock Analysis Report
United Natural Foods, Inc. (UNFI): Free Stock Analysis Report
PBF Energy Inc. (PBF): Free Stock Analysis Report
iShares Russell 2000 ETF (IWM): ETF Research Reports
iShares Core S&P SmallCap ETF (IJR): ETF Research Reports
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