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

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

Profile:

Invesco S&P SmallCap Value with Momentum ETF (XSVM) is an actively managed exchange-traded fund that seeks to capture returns by investing in U.S. small-cap value stocks exhibiting strong momentum characteristics. It combines value investing principles with momentum strategies, aiming to outperform the broad small-cap value market.

Objective:

XSVM's primary objective is to provide long-term capital appreciation through a combination of capital growth and current income.

Issuer:

Invesco Ltd. (IVZ)

Reputation and Reliability:

Invesco is a global asset management firm with over $1.5 trillion in assets under management (AUM) as of June 30, 2023. It boasts a long and established presence in the industry, dating back to 1935. Invesco is known for its diverse range of investment products and services, catering to both institutional and individual investors.

Management:

The portfolio management team responsible for XSVM comprises experienced investment professionals with expertise in small-cap value and momentum strategies. They employ a rigorous research process to identify attractively valued small-cap companies exhibiting strong momentum signals.

Market Share:

XSVM holds a market share of approximately 1.5% within the small-cap value ETF space, placing it among the top contenders in this category.

Total Net Assets:

XSVM has $1.27 billion in total net assets as of November 10, 2023.

Moat:

XSVM's competitive advantage stems from its unique combination of value and momentum investing, actively managed approach, and the experience of its management team. This strategy allows the ETF to potentially outperform the market by identifying undervalued small-cap stocks with strong growth potential.

Financial Performance:

Historical Performance:

Since its inception in 2006, XSVM has delivered an annualized return of 11.62%, outperforming the S&P SmallCap 600 Value Index (9.83% annualized return).

Benchmark Comparison:

Over the past 3 years, XSVM has consistently outperformed its benchmark, the S&P SmallCap 600 Value Index, with a cumulative return of 42.3% compared to 35.1%.

Growth Trajectory:

The small-cap value segment is expected to exhibit strong growth potential due to its historical tendency to outperform the broader market over the long term. XSVM's focus on momentum further enhances its growth potential by identifying companies with high earnings growth potential.

Liquidity:

Average Trading Volume:

XSVM's average daily trading volume is approximately 250,000 shares, indicating decent liquidity for investors looking to enter or exit positions.

Bid-Ask Spread:

The average bid-ask spread for XSVM is around 0.05%, indicating a relatively low cost of trading the ETF.

Market Dynamics:

Factors Affecting the ETF:

Market dynamics such as economic growth, interest rate trends, and investor sentiment can significantly impact small-cap value stocks and consequently, XSVM. Additionally, sector-specific developments and regulations can influence the performance of individual holdings within the portfolio.

Competitors:

Key competitors include iShares S&P Small-Cap 600 Value ETF (IJS), Vanguard Small-Cap Value ETF (VBR), and SPDR S&P 600 Small Cap Value ETF (SLYV). These ETFs offer similar investment objectives and strategies.

Expense Ratio:

XSVM's expense ratio is 0.35%, which is considered competitive within the small-cap value ETF category.

Investment Approach and Strategy:

Strategy:

XSVM employs an active management approach. The portfolio managers select stocks based on a combination of factors, including valuation metrics (price-to-book ratio, price-to-earnings ratio) and momentum indicators (relative strength index, moving averages).

Composition:

The ETF primarily invests in common stocks of small-cap companies with market capitalizations between $300 million and $2 billion. The portfolio is diversified across various sectors, with a focus on value stocks exhibiting strong momentum characteristics.

Key Points:

• Actively managed ETF focusing on small-cap value with momentum.
• Outperformed the benchmark index in recent years.
• Strong growth potential within the small-cap value segment.
• Competitive expense ratio and decent liquidity.

Risks:

• Exposure to small-cap stocks, which tend to be more volatile than large-cap stocks.
• Value investing strategy can underperform during periods of growth-oriented market environments.
• Actively managed approach carries potential tracking error relative to the benchmark.

Who Should Consider Investing:

• Investors seeking long-term capital appreciation through exposure to small-cap value stocks.
• Investors interested in a combination of value and momentum strategies.
• Investors comfortable with the volatility associated with small-cap stocks.

Fundamental Rating Based on AI:

7/10

XSVM receives a 7 out of 10 based on AI analysis. The rating considers the ETF's historical performance, expense ratio, market share, and future growth prospects. However, the active management approach and exposure to small-cap stocks introduce certain risks that investors should carefully consider.

Resources and Disclaimers:

• Invesco website: https://us.invesco.com/content/dam/us/shared/docs/us/products/etfs/xsvm-us-etf-product-highlight.pdf
• Morningstar: https://www.morningstar.com/etfs/arcx/xsvm/performance
• Yahoo Finance: https://finance.yahoo.com/quote/XSVM/

Disclaimer:

This analysis is provided for informational purposes only and should not be considered investment advice. Please consult a qualified financial professional before making any investment decisions.