Invesco S&P SmallCap Value with Momentum ETF (XSVM)XSVM

ETF Invesco S&P SmallCap Value with Momentum ETF (XSVM) Overview

Profile

Primary Focus: XSVM tracks the S&P SmallCap 600 Value with Momentum Index. It invests in small-cap US stocks with both value and momentum characteristics. These stocks typically have low valuations and strong recent price performance.

Asset Allocation: XSVM mainly invests in common stocks of US companies, focusing on the small-cap segment of the market. The portfolio typically holds around 100-200 different stocks.

Investment Strategy: XSVM uses a quantitative approach to select stocks based on a combination of value and momentum factors. Value factors include metrics like price-to-book ratio and price-to-earnings ratio. Momentum factors include price momentum and relative strength.

Objective

The primary investment goal of XSVM is to achieve long-term capital appreciation by investing in small-cap US stocks with value and momentum characteristics.

Issuer

Issuer: Invesco Ltd.

Reputation and Reliability: Invesco is a global investment management firm with over $1.5 trillion in assets under management. The company is well-known and has a long track record of providing investment solutions to clients worldwide.

Management: The ETF is managed by a team of experienced portfolio managers and analysts at Invesco. The team has extensive experience in small-cap value investing and quantitative analysis.

Market Share

XSVM is a relatively small ETF, with a market share of less than 1% within the small-cap value ETF category.

Total Net Assets

As of October 27, 2023, XSVM has approximately $400 million in total net assets.

Moat

XSVM's competitive advantages include:

• Quantitative Approach: The ETF's systematic approach to stock selection aims to identify undervalued companies with strong momentum potential.
• Experienced Management: The ETF is managed by a team with a proven track record in small-cap value investing.
• Niche Focus: XSVM targets a specific market segment, small-cap value with momentum stocks, offering investors a unique exposure within the broader small-cap space.

Financial Performance

Historical Performance: Over the past 3 years, XSVM has delivered an annualized return of 16.5%, outperforming the S&P 600 SmallCap Value Index.

Benchmark Comparison: XSVM has consistently outperformed its benchmark index over various timeframes, demonstrating its effectiveness in capturing alpha.

Growth Trajectory

The small-cap value with momentum segment is expected to continue growing due to its potential for higher returns and diversification benefits.

Liquidity

Average Trading Volume: XSVM's average daily trading volume is approximately 50,000 shares, indicating moderate liquidity.

Bid-Ask Spread: The typical bid-ask spread for XSVM is around 0.02%, indicating a low transaction cost.

Market Dynamics

The ETF's market environment is affected by various factors, including:

• Economic Growth: A strong economy typically benefits small-cap stocks, including those with value and momentum characteristics.
• Interest Rates: Rising interest rates can negatively impact small-cap value stocks.
• Investor Sentiment: Market sentiment towards small-cap stocks and value investing strategies can impact the ETF's performance.

Competitors

Key competitors include:

• iShares S&P SmallCap 600 Value ETF (IJS) - Market Share: 25%
• Vanguard Small-Cap Value ETF (VISV) - Market Share: 20%
• Schwab Small-Cap Value ETF (SVAL) - Market Share: 15%

Expense Ratio

XSVM's expense ratio is 0.39%, which is considered low for actively managed ETFs in its category.

Investment Approach and Strategy

Strategy: XSVM tracks the S&P SmallCap 600 Value with Momentum Index, which consists of small-cap stocks selected based on a combination of value and momentum criteria.

Composition: The ETF primarily invests in small-cap stocks across various industries, with a focus on sectors like financials, technology, and healthcare.

Key Points

• Invests in small-cap US stocks with value and momentum characteristics.
• Actively managed using a quantitative approach.
• Outperformed its benchmark index historically.
• Moderate liquidity and low expense ratio.

Risks

• Market Volatility: Small-cap stocks are generally more volatile than large-cap stocks.
• Value Investing Risk: Value investing strategies can underperform during periods of strong market growth.
• Momentum Investing Risk: Momentum strategies can be susceptible to reversals and short-term volatility.

Who Should Consider Investing

XSVM is suitable for investors seeking:

• Long-term capital appreciation potential.
• Exposure to small-cap value stocks with momentum.
• Diversification within their small-cap investment allocation.
• Tolerance for higher volatility compared to large-cap stocks.

Fundamental Rating Based on AI

Rating: 8/10

Justification: XSVM exhibits strong fundamentals based on its quantitative investment approach, experienced management, niche focus, and historical outperformance. However, the ETF's relatively small size and moderate liquidity might limit its appeal to some investors.

Resources and Disclaimers

Resources:

• Invesco ETF website: https://us.invesco.com/etfs/product/detail?audienceType=Investor&productId=XSVM
• ETF.com: https://etfdb.com/etf/XSVM/invesco-sp-smallcap-value-with-momentum-etf/

Disclaimer: This information is for educational purposes only and should not be considered investment advice. Please consult with a qualified financial advisor before making any investment decisions.