Is Invesco S&P 500 Pure Value ETF a Strong ETF Right Now?

Designed to provide broad exposure to the Style Box - Large Cap Value category of the market, the Invesco S&P 500 Pure Value ETF RPV is a smart beta exchange traded fund launched on 03/01/2006.

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.

There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track 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.

Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.

Fund Sponsor & Index

The fund is managed by Invesco. RPV has been able to amass assets over $2.01 billion, making it one of the average sized ETFs in the Style Box - Large Cap Value. This particular fund seeks to match the performance of the S&P 500 Pure Value Index before fees and expenses.

The S&P 500 Pure Value Index measures the performance of securities that exhibit strong value characteristics in the S&P 500 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.

With on par with most peer products in the space, this ETF has annual operating expenses of 0.35%.

It's 12-month trailing dividend yield comes in at 2.35%.

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.

RPV's heaviest allocation is in the Financials sector, which is about 30.60% of the portfolio. Its Healthcare and Consumer Discretionary round out the top three.

When you look at individual holdings, General Motors Co GM accounts for about 4.02% of the fund's total assets, followed by Berkshire Hathaway Inc (BRK/B) and Ford Motor Co F.

The top 10 holdings account for about 25.57% of total assets under management.

Performance and Risk

The ETF has gained about 3.79% so far this year and is up roughly 15.51% in the last one year (as of 06/07/2024). In the past 52-week period, it has traded between $67.85 and $88.44.

The fund has a beta of 1.17 and standard deviation of 19.08% for the trailing three-year period, which makes RPV a medium risk choice in this particular space. With about 98 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco S&P 500 Pure Value ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.

IShares Russell 1000 Value ETF IWD tracks Russell 1000 Value Index and the Vanguard Value ETF VTV tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $55.21 billion in assets, Vanguard Value ETF has $115.63 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.

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 - Large Cap Value.

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