Designed to provide broad exposure to the Style Box - Mid Cap Value category of the market, the Invesco S&P MidCap 400 Pure Value ETF (RFV) is a smart beta exchange traded fund launched on 03/01/2006.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Managed by Invesco, RFV has amassed assets over $260.24 million, making it one of the average sized ETFs in the Style Box - Mid Cap Value. This particular fund seeks to match the performance of the S&P MidCap 400 Pure Value Index before fees and expenses.
The S&P MidCap 400 Pure Value Index measures the performance of securities that exhibit strong value characteristics in the S&P MidCap 400 Index.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.35% for this ETF, which makes it on par with most peer products in the space.
RFV's 12-month trailing dividend yield is 0.92%.
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.
Representing 24% of the portfolio, the fund has heaviest allocation to the Consumer Discretionary sector; Financials and Industrials round out the top three.
Taking into account individual holdings, Avnet Inc (AVT) accounts for about 2.77% of the fund's total assets, followed by Td Synnex Corp (SNX) and United States Steel Corp (X).
Its top 10 holdings account for approximately 23.71% of RFV's total assets under management.
Performance and Risk
The ETF has lost about -2.04% so far this year and is up roughly 14.74% in the last one year (as of 09/16/2024). In the past 52-week period, it has traded between $91.10 and $119.83.
The ETF has a beta of 1.35 and standard deviation of 22.03% for the trailing three-year period, making it a high risk choice in the space. With about 86 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco S&P MidCap 400 Pure Value ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell Mid-Cap Value ETF (IWS) tracks Russell MidCap Value Index and the Vanguard Mid-Cap Value ETF (VOE) tracks CRSP U.S. Mid Cap Value Index. IShares Russell Mid-Cap Value ETF has $13.32 billion in assets, Vanguard Mid-Cap Value ETF has $17.45 billion. IWS has an expense ratio of 0.23% and VOE charges 0.07%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Mid Cap Value.
Bottom Line
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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Get it free >>Invesco S&P MidCap 400 Pure Value ETF (RFV): ETF Research Reports
Avnet, Inc. (AVT) : Free Stock Analysis Report
United States Steel Corporation (X) : Free Stock Analysis Report
TD SYNNEX Corporation (SNX) : Free Stock Analysis Report
Vanguard Mid-Cap Value ETF (VOE): ETF Research Reports
iShares Russell Mid-Cap Value ETF (IWS): ETF Research Reports
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
