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Should Invesco S&P SmallCap 600 Pure Value ETF (RZV) Be on Your Investing Radar?

Zacks Equity Research
·4-min read

Looking for broad exposure to the Small Cap Value segment of the US equity market? You should consider 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 $286.98 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.

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.

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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 0.35%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 0.97%.

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 20.40% of the portfolio. Financials and Industrials round out the top three.

Looking at individual holdings, Olympic Steel Inc (ZEUS) accounts for about 1.77% of total assets, followed by Suncoke Energy Inc (SXC) and Kelly Services Inc (KELYA).

The top 10 holdings account for about 13.66% 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 -5.98% so far this year and is up roughly 4.59% in the last one year (as of 05/03/2022). In the past 52-week period, it has traded between $85.50 and $105.17.

The ETF has a beta of 1.49 and standard deviation of 35.83% for the trailing three-year period, making it a high risk choice in the space. With about 173 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 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 $12.82 billion in assets, Vanguard SmallCap Value ETF has $25 billion. IWN has an expense ratio of 0.24% and VBR charges 0.07%.

Bottom-Line

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are 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.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Invesco S&P SmallCap 600 Pure Value ETF (RZV): ETF Research Reports
 
Kelly Services, Inc. (KELYA) : Free Stock Analysis Report
 
SunCoke Energy, Inc. (SXC) : Free Stock Analysis Report
 
Olympic Steel, Inc. (ZEUS) : 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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