Should Invesco S&P SmallCap 600 Revenue ETF (RWJ) Be on Your Investing Radar?
Designed to provide broad exposure to the Small Cap Blend segment of the US equity market, the Invesco S&P SmallCap 600 Revenue ETF (RWJ) is a passively managed exchange traded fund launched on 02/22/2008.
The fund is sponsored by Invesco. It has amassed assets over $943.40 million, making it one of the average sized ETFs attempting to match the Small Cap Blend segment of the US equity market.
Why Small Cap Blend
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.
Blend ETFs are aptly named, since they tend to hold a mix of growth and value stocks, as well as show characteristics of both kinds of equities.
Costs
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
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 1.26%.
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.
This ETF has heaviest allocation to the Consumer Discretionary sector--about 23.70% of the portfolio. Industrials and Energy round out the top three.
Looking at individual holdings, World Fuel Services Corp (INT) accounts for about 3.76% of total assets, followed by United Natural Foods Inc (UNFI) and Pbf Energy Inc (PBF).
The top 10 holdings account for about 17.05% of total assets under management.
Performance and Risk
RWJ seeks to match the performance of the OFI Revenue Weighted Small Cap Index before fees and expenses. The S&P SmallCap 600 Revenue-Weighted Index is constructed using a rules-based methodology that re-weights the constituent securities of the S&P SmallCap 600 Index according to the revenue earned by the companies in the parent index, subject to a maximum 5% per company weighting.
The ETF has lost about -13.73% so far this year and is down about -8.61% in the last one year (as of 12/20/2022). In the past 52-week period, it has traded between $95.98 and $126.40.
The ETF has a beta of 1.31 and standard deviation of 35.98% for the trailing three-year period, making it a high risk choice in the space. With about 591 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco S&P SmallCap 600 Revenue 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, RWJ is a good option for those seeking exposure to the Style Box - Small Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 2000 ETF (IWM) and the iShares Core S&P SmallCap ETF (IJR) track a similar index. While iShares Russell 2000 ETF has $53.08 billion in assets, iShares Core S&P SmallCap ETF has $64.16 billion. IWM has an expense ratio of 0.19% and IJR charges 0.06%.
Bottom-Line
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
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 Revenue ETF (RWJ): ETF Research Reports
World Fuel Services Corporation (INT) : Free Stock Analysis Report
United Natural Foods, Inc. (UNFI) : Free Stock Analysis Report
PBF Energy Inc. (PBF) : Free Stock Analysis Report
iShares Russell 2000 ETF (IWM): ETF Research Reports
iShares Core S&P SmallCap ETF (IJR): ETF Research Reports
