Designed to provide broad exposure to the Small Cap Value segment of the US equity market, the Invesco S&P SmallCap Value with Momentum ETF (XSVM) is a passively managed exchange traded fund launched on 03/03/2005.
The fund is sponsored by Invesco. It has amassed assets over $ 726.57 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.
Value stocks are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their lower than average sales and earnings growth rates. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. They are however likely to underperform growth stocks in strong bull markets.
When considering an ETF’s total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long run if all other factors remain equal.
Annual operating expenses for this ETF are 0.39%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.45%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund’s holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Financials sector – about 34.20% of the portfolio. Consumer Discretionary and Industrials round out the top three.
Looking at individual holdings, Olympic Steel Inc (ZEUS) accounts for about 2.96% of total assets, followed by Rayonier Advanced Materials Inc (RYAM) and Andersons Inc / the (ANDE).
The top 10 holdings account for about 17.9% of total assets under management.
Performance and Risk
XSVM seeks to match the performance of the S&P 600 HIGH MOMENTUM VALUE INDEX before fees and expenses. The S&P 600 High Momentum Value Index is composed of securities with strong value characteristics selected from the Russell 2000 Index.
The ETF has lost about -5.45% so far this year and it’s up approximately 8.17% in the last one year (as of 04/26/2022). In the past 52-week period, it has traded between $ 46.50 and $ 56.67.
The ETF has a beta of 1.22 and a standard deviation of 34.18% for the trailing three-year period. With about 121 holdings, it effectively diversifies company-specific risk.
Invesco S&P SmallCap Value with Momentum 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, XSVM is a good 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 $ 13.54 billion in assets, Vanguard SmallCap Value ETF has $ 25.81 billion. IWN has an expense ratio of 0.24% and VBR charges 0.07%.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
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 Value with Momentum ETF (XSVM): ETF Research Reports
The Andersons, Inc. (ANDE): Free Stock Analysis Report
Olympic Steel, Inc. (ZEUS): Free Stock Analysis Report
Rayonier Advanced Materials Inc. (RYAM): 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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Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.