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A Small-Cap ETF Is The Champion Of The Bull Market

November 30, 2016 7:11 am
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With any luck, the current bull market will celebrate its ninth anniversary in March 2017. A wide array of non-leveraged exchange traded funds have posted stellar returns since March 2009, but among broader market equity funds, small- and mid-cap funds have generated particularly breathtaking returns.

Of the many small-cap ETFs that have delivered boffo performances since the start of the current bull market, the Guggenheim S&P SmallCap 600 Pure Value ETF (NYSE: RZV) takes the cake. Actually, of any since the start of this bull market, the Guggenheim S&P SmallCap 600 Pure Value ETF is the best performer.

As of November 25, RZV had generated an average annualized return of 30.4 percent since March 9, 2009, according to Morningstar. That's good for a cumulative return of nearly 676 percent, or turning a $10,000 investment in RZV on March 9, 2009 into almost $77,600 as of November 25, 2016.

For all the talk about value factor being a laggard in recent years, RZV certainly somewhat refutes that notion. The same goes for the Guggenheim S&P 500 Pure Value ETF (NYSE: RPV), which is the second-best non-leveraged ETF since the birth of the current bull market. A $10,000 investment in RPV on March 9, 2009 would have been worth nearly $73,500 on November 25.

RZV tracks the S&P SmallCap 600 Pure Value Index. Though that benchmark is an offshoot of the widely followed S&P SmallCap 600 Index, RZV holds just 151 stocks, according to issuer data.

S&P measures value stocks “using three factors: the ratios of book value, earnings, and sales to price. S&P Pure Value Indices include only those components of the parent index that exhibit strong value characteristics, and weights them by value score,” according to the index provider.

RZV allocates a combined 45 percent of its weight to industrial and consumer discretionary stocks with materials and technology names combining for another 24 percent.

RZV's growth counterpart, the Guggenheim S&P SmallCap 600 Pure Growth ETF (NYSE: RZG), has been a fine bull market performer in its own right.

During the current bull market, RZG has delivered average annualized returns of almost 24.3 percent, turning a $10,000 investment on March 9, 2009 into more than $53,400 on Nov. 25, according to Morningstar data.

RZG, home to nearly $170 million in assets under management, follows the S&P SmallCap 600 Pure Growth Index.

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