Making its debut on 03/01/2006, smart beta exchange traded fund Invesco S&P SmallCap 600 Pure Value ETF (RZV) provides investors broad exposure to the Style Box - Small Cap Value category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
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
Because the fund has amassed over $223.59 million, this makes it one of the average sized ETFs in the Style Box - Small Cap Value. RZV is managed by Invesco. This particular fund 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.
Cost & Other Expenses
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.
Operating expenses on an annual basis are 0.35% for RZV, making it on par with most peer products in the space.
RZV's 12-month trailing dividend yield is 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.
For RZV, it has heaviest allocation in the Consumer Discretionary sector --about 25.50% of the portfolio --while Financials and Energy round out the top three.
Taking into account individual holdings, Par Pacific Holdings Inc (PARR) accounts for about 1.65% of the fund's total assets, followed by Topgolf Callaway Brands Corp (MODG) and Kohl's Corp (KSS).
The top 10 holdings account for about 14.7% of total assets under management.
Performance and Risk
The ETF has lost about -2.54% so far this year and was up about 4.68% in the last one year (as of 02/13/2025). In the past 52-week period, it has traded between $96.80 and $119.36.
The ETF has a beta of 1.42 and standard deviation of 24% for the trailing three-year period, making it a high risk choice in the space. With about 147 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco S&P SmallCap 600 Pure Value ETF is a reasonable option for investors seeking to outperform the Style Box - Small Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
Avantis U.S. Small Cap Value ETF (AVUV) tracks ---------------------------------------- and the Vanguard Small-Cap Value ETF (VBR) tracks CRSP U.S. Small Cap Value Index. Avantis U.S. Small Cap Value ETF has $15.88 billion in assets, Vanguard Small-Cap Value ETF has $31.50 billion. AVUV has an expense ratio of 0.25% 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.
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Get it free >>Invesco S&P SmallCap 600 Pure Value ETF (RZV): ETF Research Reports
Kohl's Corporation (KSS) : Free Stock Analysis Report
Par Pacific Holdings, Inc. (PARR) : Free Stock Analysis Report
Vanguard Small-Cap Value ETF (VBR): ETF Research Reports
Avantis U.S. Small Cap Value ETF (AVUV): ETF Research Reports
Topgolf Callaway Brands Corp. (MODG) : Free Stock Analysis Report
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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.
