A Value ETF That Merits Further Examination

The value factor and the exchange-traded funds that emphasize that factor are received renewed attention this year as growth and momentum lag. One value ETF that has been on the receiving end of increased adulation is the Guggenheim Invest S&P 500 Pure Value ETF RPV.

Part of the reason RPV has been in the spotlight this year is the seven-year anniversary of the current bull market. Over that time, RPV has notched a legendary performance, turning $10,000 invested on March 10, 2009, into more than $62,000 as of March 10, 2016. 

A Closer Peek At RPV

“After underperforming its growth counterpart the last three calendar years, the S&P 500 Value index has been the stronger performer year to date through March 24. Its 0.6 percent gain was stronger than the 1.4 percent decline for the S&P 500 Growth index. However, investors that believe value can continue to perform well have a lot of ETF choices,” said S&P Capital IQ in a new research note.

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For its part, RPV is higher by nearly two percent this year and an impressive 7.7 percent over the past month. The $711.6 million RPV, which carries a five-star Morningstar rating, is true to its value lineage with a price-to-earnings ratio of 12.4 and a price-to-book ratio of just 1.2, according to issuer data.

Holdings And Allocations

“RPV has just 115 holdings and the sector exposure is different than IVE. While financials (25 percent of assets), utilities (15 percent) and energy (10 percent) are all relatively high compared to the S&P 500 index, so is consumer discretionary (16 percent). Meanwhile, consumer staples (6 percent) joins information technology (6 percent) as underweighted,” added S&P Capital IQ.

RPV's nearly 35 percent combined weight to the financial services and energy sectors is not uncommon among value ETFs, indicating this genre of ETF is potentially vulnerable to retrenchment in either of those sectors.

Interestingly, RPV allocates nearly 31 percent of its combined weight to the consumer discretionary and utilities sectors. That can be viewed as something of a surprise to value purists because those groups are seen as expensive relative to the broader market.