Investors in New York City, New York, looking to evaluate exchange-traded funds (ETFs) might find interest in the Invesco S&P SmallCap Value with Momentum ETF (XSVM). This ETF, establishing operations in 2005, tracks the S&P 600 High Momentum Value Index and boasts a diversified portfolio of 115 stocks. Offering a 30-day SEC yield of 1.69% with an expense ratio of 0.36%, XSVM aims to provide investors with a unique investment opportunity in the small-cap value market.

According to Invesco, XSVM selects stocks from the S&P 600 based on three key ratios: book-value-to-price, earnings-to-price, and sales-to-price. The momentum score is derived from the 12-month return, excluding the most recent month. This strategy results in the inclusion of 120 stocks in the S&P 600 High Momentum Value Index, which is reconstituted and rebalanced semi-annually. XSVM boasts a portfolio turnover rate of 86%, showcasing active management in the small-cap value space.

XSVM’s portfolio focuses solely on U.S. companies, with a mix of micro-caps and small caps. The top three sectors – consumer discretionary, industrials, and financials – are well-balanced, with other sectors accounting for less than 11% of the portfolio. Compared to its parent index, XSVM overweighs consumer discretionary and energy while significantly underweighting healthcare, technology, real estate, and excluding utilities.

With a diverse range of holdings, XSVM’s top 10 assets represent 14.9% of the portfolio, each with different weightings and valuation metrics to mitigate individual company risks. The fund’s valuation ratios, such as price/earnings and price/sales, indicate a more attractive investment proposition compared to its parent index, offering potential for superior fundamental growth metrics in the small-cap value market.

When comparing XSVM’s historical performance to its benchmark, the iShares Core S&P Small-Cap ETF (IJR), XSVM has marginally outperformed IJR since its inception in 2005. However, recent data shows XSVM beating the small-cap benchmark by 14% over the past year, showcasing its potential for outperformance in the current market environment.

Looking at competitors in the small-cap value space, XSVM stands out as the smallest fund with higher fees and turnover ratios. While the fund may not be as liquid as its peers, its performance has been competitive, landing in the middle of the pack compared to actively managed ETFs. By offering a unique investment strategy in the small-cap value market, XSVM provides investors with a diversified and potentially lucrative opportunity for long-term growth.

In conclusion, Invesco’s XSVM ETF offers investors a distinctive approach to small-cap value investing, combining valuation metrics and momentum strategies to create a diversified portfolio. While historical performance has been mixed, XSVM’s attractive valuation ratios and potential for fundamental growth make it a compelling option for investors seeking exposure to the small-cap value segment of the market.