Is Invesco S&P MidCap 400 Pure Value ETF (RFV) a Strong ETF Right Now?
The Invesco S&P MidCap 400 Pure Value ETF (RFV) was launched on 03/01/2006, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Mid 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.
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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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
RFV is managed by Invesco, and this fund has amassed over $226.73 million, which makes it one of the smaller ETFs in the Style Box - Mid Cap Value. RFV, before fees and expenses, seeks to match the performance of the S&P MidCap 400 Pure Value Index.
The S&P MidCap 400 Pure Value Index measures the performance of securities that exhibit strong value characteristics in the S&P MidCap 400 Index.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining 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 1.66%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
RFV's heaviest allocation is in the Consumer Discretionary sector, which is about 35.60% of the portfolio. Its Information Technology and Financials round out the top three.
When you look at individual holdings, Taylor Morrison Home Corp (TMHC) accounts for about 3.38% of the fund's total assets, followed by Goodyear Tire & Rubber Co/the (GT) and Kb Home (KBH).
Its top 10 holdings account for approximately 28.4% of RFV's total assets under management.
Performance and Risk
Year-to-date, the Invesco S&P MidCap 400 Pure Value ETF has gained about 12.50% so far, and is up roughly 21.11% over the last 12 months (as of 06/29/2023). RFV has traded between $79.72 and $109.34 in this past 52-week period.
The fund has a beta of 1.41 and standard deviation of 24.45% for the trailing three-year period, which makes RFV a high risk choice in this particular space. With about 76 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco S&P MidCap 400 Pure Value ETF is a reasonable option for investors seeking to outperform the Style Box - Mid Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell Mid-Cap Value ETF (IWS) tracks Russell MidCap Value Index and the Vanguard Mid-Cap Value ETF (VOE) tracks CRSP U.S. Mid Cap Value Index. IShares Russell Mid-Cap Value ETF has $12.60 billion in assets, Vanguard Mid-Cap Value ETF has $16 billion. IWS has an expense ratio of 0.23% and VOE 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 - Mid 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 MidCap 400 Pure Value ETF (RFV): ETF Research Reports
The Goodyear Tire & Rubber Company (GT) : Free Stock Analysis Report
KB Home (KBH) : Free Stock Analysis Report
Taylor Morrison Home Corporation (TMHC) : Free Stock Analysis Report
Vanguard Mid-Cap Value ETF (VOE): ETF Research Reports
iShares Russell Mid-Cap Value ETF (IWS): ETF Research Reports
