Invesco S&P 500 Pure Value ETF (RPV): Good Mix Protecting Investor from Rising Volatility in Cyclical Stocks

The Federal Reserve’s hard stance on monetary tightening requires an eye opener for some investors who are still routinely inclined to aggressive growth investing. But regardless of the duration and depth of the technical recession in the U.S. we can manage some low risk strategy for the time being. One of them is based on buying a basket of value (as opposed to growth) stocks. The Invesco S&P 500 Pure Value ETF (RPV) has been tracking the S&P 500 Pure Value Index since March 2006. It has 121 holdings, an expense ratio of 0.35% and a 12-month distribution yield of 1.96%.

RPV is a “pure value” S&P 500 ETF. It is overweight in financials, especially in insurance. It has underperformed the S&P 500 since inception, but beats it in 2022 to date. RPV holds 120 stocks. The top 10 holdings represent 19.6% of the portfolio value. Some of them are nicely positioned due to rising energy prices Marathon Petroleum Corp. and Valero Energy, as well as the always acclaimed Berkshire Hathaway, and some others including Archer-Daniels-Midland, Prudential Financial, Metlife, The Allstate Corporation and others.

As we see, financials and insurance are by far the most represented sectors in the ETF structure, with about 30% of asset value. Compared to other ETFs like IVE and SPY, as we mentioned, RPV massively overweights financials, materials, and to a lesser extent energy and utilities. It underweights technology, industrials and almost ignores real estate. This combination, in our view, gives quite solid protection against rising volatility in the cyclical stocks.