News

A smart beta exchange traded fund, the Invesco S&P SmallCap 600 Pure Value ETF (RZV) debuted on 03/01/2006, and offers broad exposure to the Style Box - Small Cap Value category of the market.

What Are Smart Beta ETFs?

The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.

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.

But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.

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.

Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.

Fund Sponsor & Index

The fund is managed by Invesco. RZV has been able to amass assets over $201.54 million, making it one of the average sized ETFs in the Style Box - Small Cap Value. 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

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 RZV are 0.35%, which makes it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 0.93%.

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.

RZV's heaviest allocation is in the Consumer Discretionary sector, which is about 25% of the portfolio. Its Financials and Energy round out the top three.

When you look at individual holdings, Spartannash Co (SPTN) accounts for about 1.99% of the fund's total assets, followed by Proassurance Corp (PRA) and Par Pacific Holdings Inc (PARR).

Its top 10 holdings account for approximately 16.48% of RZV's total assets under management.

Performance and Risk

Year-to-date, the Invesco S&P SmallCap 600 Pure Value ETF has lost about -9.51% so far, and is down about -4.07% over the last 12 months (as of 05/16/2025). RZV has traded between $83.11 and $119.36 in this past 52-week period.

The fund has a beta of 1.20 and standard deviation of 25.17% for the trailing three-year period, which makes RZV a high risk choice in this particular 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 $15.48 billion in assets, Vanguard Small-Cap Value ETF has $29.20 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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Invesco S&P SmallCap 600 Pure Value ETF (RZV): ETF Research Reports

ProAssurance Corporation (PRA) : Free Stock Analysis Report

SpartanNash Company (SPTN) : 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

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research