Small cap value ETFs

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Small cap value ETFs are gaining investor attention due to their reasonable valuations and greater upside potential. These ETFs focus on small-cap companies with a value investing approach, seeking undervalued stocks that the market has not fully recognized. Small cap companies typically have market capitalizations ranging from approximately $300 million to $2 billion. Here are some of the best-performing small cap value ETFs of 2023:

  • First Trust Small Cap Value AlphaDEX Fund (FYT):
    • Description: FYT seeks to track an index of securities selected from the NASDAQ US 700 Small Cap Index. These securities are rescreened and weighted based on a tiered process.
    • Holdings: FYT includes a diverse portfolio of small-cap value stocks. Specific holdings may vary based on the index criteria and the rebalancing process.
  • Avantis U.S. Small Cap Value ETF (AVUV):
    • Description: AVUV is an actively managed fund that aims to achieve long-term capital appreciation by investing in highly profitable U.S. small-cap value stocks across different market sectors.
    • Holdings: AVUV’s holdings consist of small-cap value stocks selected by its fund manager based on profitability metrics. The ETF’s portfolio is actively managed.
  • Invesco S&P SmallCap 600 Pure Value ETF (RZV):
    • Description: RZV provides a pure value approach to the S&P SmallCap 600 Index. It selects and weights U.S. small-cap value stocks based on specific criteria.
    • Holdings: RZV holds small-cap value stocks within the S&P SmallCap 600 Index, focusing on those meeting value-oriented criteria.
  • Roundhill Acquirers Deep Value ETF (DEEP):
    • Description: DEEP tracks an equal-weighted index comprising the 100 smallest U.S. stocks, including micro-cap stocks, that are potentially deeply undervalued based on their fundamentals.
    • Holdings: DEEP’s holdings consist of the 100 smallest U.S. stocks selected for their deep value potential. The ETF aims to capture undervalued opportunities.
  • Invesco S&P SmallCap Value with Momentum ETF (XSVM):
    • Description: XSVM tracks a value score-weighted index of U.S. small-cap stocks selected using a combination of value and momentum screens.
    • Holdings: XSVM’s holdings are based on both value and momentum factors. The ETF seeks to benefit from stocks that display both value and upward price momentum characteristics.

ETF Newz Says:

Investing in small cap value ETFs offers potential for higher returns and diversification across different industries. However, it also comes with higher volatility, market sensitivity, and company-specific risks. The 2024 outlook for these ETFs is mixed, with factors like the Fed’s rate hike decisions and the possibility of a recession influencing their performance.


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