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Is Invesco S&P SmallCap 600 Pure Value ETF (RZV) a Strong ETF Right Now?

The Invesco S&P SmallCap 600 Pure Value ETF (RZV) made its debut on 03/01/2006, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Small Cap Value category of the market.

What Are Smart Beta ETFs?

The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.

Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well 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.

While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.

Fund Sponsor & Index

Managed by Invesco, RZV has amassed assets over $302.87 million, making it one of the average sized ETFs in the Style Box - Small Cap Value. Before fees and expenses, RZV seeks to match the performance of the S&P SmallCap 600 Pure Value Index.

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.

Cost & Other Expenses

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.

Annual operating expenses for this ETF are 0.35%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.55%.

Sector Exposure and Top Holdings

Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.

For RZV, it has heaviest allocation in the Consumer Discretionary sector --about 29.10% of the portfolio --while Industrials and Financials round out the top three.

When you look at individual holdings, M/i Homes Inc (MHO) accounts for about 1.58% of the fund's total assets, followed by Genworth Financial Inc (GNW) and Kelly Services Inc (KELYA).

The top 10 holdings account for about 13.08% of total assets under management.

Performance and Risk

The ETF has lost about -3.38% and is down about -10.94% so far this year and in the past one year (as of 03/24/2023), respectively. RZV has traded between $76.31 and $106.78 during this last 52-week period.

The ETF has a beta of 1.48 and standard deviation of 32.58% for the trailing three-year period, making it a high risk choice in the space. With about 151 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco S&P SmallCap 600 Pure Value ETF is an excellent option for investors seeking to outperform the Style Box - Small Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.

IShares Russell 2000 Value ETF (IWN) tracks Russell 2000 Value Index and the Vanguard Small-Cap Value ETF (VBR) tracks CRSP U.S. Small Cap Value Index. IShares Russell 2000 Value ETF has $10.79 billion in assets, Vanguard Small-Cap Value ETF has $22.96 billion. IWN has an expense ratio of 0.23% and VBR 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 - Small 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.

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

Genworth Financial, Inc. (GNW) : Free Stock Analysis Report

Kelly Services, Inc. (KELYA) : Free Stock Analysis Report

M/I Homes, Inc. (MHO) : Free Stock Analysis Report

Vanguard Small-Cap Value ETF (VBR): ETF Research Reports

iShares Russell 2000 Value ETF (IWN): ETF Research Reports

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Zacks Investment Research