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Should Invesco S&P SmallCap Value with Momentum ETF (XSVM) Be on Your Investing Radar?

Style Box ETF report for XSVM

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This story originally appeared on Zacks

The Invesco S&P SmallCap Value with Momentum ETF (XSVM) was launched on 03/03/2005, and is a passively managed exchange traded fund designed to offer broad exposure to the Small Cap Value segment of the US equity market.

- Zacks

The fund is sponsored by Invesco. It has amassed assets over $483.02 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

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.

Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.

Costs

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 0.39%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 0.91%.

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 Financials sector--about 29.60% of the portfolio. Consumer Discretionary and Industrials round out the top three.

Looking at individual holdings, Veritiv Corp (VRTV) accounts for about 2.25% of total assets, followed by United Natural Foods Inc (UNFI) and Group 1 Automotive Inc (GPI).

The top 10 holdings account for about 16.4% of total assets under management.

Performance and Risk

XSVM seeks to match the performance of the S&P 600 HIGH MOMENTUM VALUE INDEX before fees and expenses. The S&P 600 High Momentum Value Index is composed of securities with strong value characteristics selected from the Russell 2000 Index.

The ETF has gained about 49.86% so far this year and it's up approximately 48.35% in the last one year (as of 12/20/2021). In the past 52-week period, it has traded between $34.38 and $56.67.

The ETF has a beta of 1.26 and standard deviation of 33.77% for the trailing three-year period. With about 117 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco S&P SmallCap Value with Momentum 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, XSVM is a sufficient 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 $15.36 billion in assets, Vanguard SmallCap Value ETF has $25.74 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 Value with Momentum ETF (XSVM): ETF Research Reports

 

Group 1 Automotive, Inc. (GPI): Free Stock Analysis Report

 

United Natural Foods, Inc. (UNFI): 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

 

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Zacks Investment Research