Should Invesco S&P SmallCap 600 Pure Value ETF (RZV) Be on Your Investing Radar?
Launched on 03/01/2006, the Invesco S&P SmallCap 600 Pure Value ETF (RZV) is a passively managed exchange traded fund designed to provide a broad exposure to the Small Cap Value segment of the US equity market.
The fund is sponsored by Invesco. It has amassed assets over $252.07 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.
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. 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
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 0.35%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.17%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. 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 19.90% of the portfolio. Consumer Discretionary and Industrials round out the top three.
Looking at individual holdings, Jetblue Airways Corp (JBLU) accounts for about 2.02% of total assets, followed by World Kinect Corp (WKC) and Phinia Inc (PHIN).
The top 10 holdings account for about 16.39% 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 measures the performance of securities that exhibit strong value characteristics in the S&P SmallCap 600 Index.
The ETF has lost about -2.59% so far this year and is up roughly 21.42% in the last one year (as of 05/29/2024). In the past 52-week period, it has traded between $83.38 and $108.67.
The ETF has a beta of 1.47 and standard deviation of 24.59% for the trailing three-year period, making it a high risk choice in the space. With about 144 holdings, it effectively diversifies company-specific risk.
Alternatives
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 Small-Cap Value ETF (VBR) track a similar index. While iShares Russell 2000 Value ETF has $11.70 billion in assets, Vanguard Small-Cap Value ETF has $28.15 billion. IWN has an expense ratio of 0.24% and VBR charges 0.07%.
Bottom-Line
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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Get it free >>Invesco S&P SmallCap 600 Pure Value ETF (RZV): ETF Research Reports
JetBlue Airways Corporation (JBLU) : Free Stock Analysis Report
Vanguard Small-Cap Value ETF (VBR): ETF Research Reports
iShares Russell 2000 Value ETF (IWN): ETF Research Reports
World Kinect Corporation (WKC) : Free Stock Analysis Report
PHINIA Inc. (PHIN) : Free Stock Analysis Report
