ETFdb Logo
ETFdb Logo
ETFdb Logo
ETFdb Logo
  • Channels
    • Active ETF
    • Alternatives
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Disruptive Technology
    • Dividend
    • Dual Impact
    • Emerging Markets
    • Energy Infrastructure
    • Entrepreneur ETF
    • Equity ETF
    • ESG
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Fixed Income
    • Future ETFs
    • Gold & Silver Investing
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Modern Alpha
    • Multi-Asset
    • Multi-Factor
    • Nasdaq Investment Intelligence
    • Portfolio Strategies
    • Retirement Income
    • Smart Beta
    • Thematic Investing
    • Volatility Resource
  • Database
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
    • ETF Data for Journalists
    • ETF Nerds
  • Research
    • First Bitcoin ETF
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
    • ETFs Future-Forward 2021: An iShares Investing Symposium
    • Three Themes for 2021: An iShares & MSCI Investing Symposium
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Videos & Podcasts
    • ETF 360 Video Series
    • ETF Trends on Videos
    • ETF Trends on Podcasts
    • ETF Prime Podcast
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. ETF Education Channel
  2. Why the RZG ETF Has Yet to Really Accelerate
ETF Education Channel
Share

Why the RZG ETF Has Yet to Really Accelerate

Tom LydonJun 09, 2021
2021-06-09

On its own, the nearly 17% (as of June 7) returned by the Invesco S&P Smallcap 600Pure Growth ETF (RZG B-) this year is impressive.

However, when RZG is measured against its value counterpart, the Invesco S&P SmallCap 600 Pure Value ETF (RZV C+), the small cap growth exchange traded fund pales in comparison. RPV is higher by almost 33%.

In other words, RZG is in a similar place to large cap growth funds. It’s not down on the year; it’s merely trailing value rivals. Pinpointing what’s “ailing” the $138.6 million RZG in 2021 isn’t difficult.

In theory, RZG’s 22.47% weight to consumer cyclical stocks should be advantageous. After all, the Invesco S&P SmallCap Consumer Discretionary ETF (PSCD B+) is higher by 49.56% year-to-date – a performance well in excess of large cap consumer discretionary indices.

What’s hindering RZG is tech – a theme seen with large cap growth funds – and healthcare, which takes on a growth feel in the small cap space. Those sectors combine for 36.44% of the fund’s weight, according to issuer data.

“Last month, losses in biotech and solar stocks led broader declines in small-cap health care and technology shares,” writes Morningstar analyst Lauren Solberg. “Meanwhile, the rebound in energy stocks—a group which no longer can count any names in the small-growth bucket—has contributed to the group’s lagging performance.”

RZG has a 3.88% energy weight while stablemate RZV devotes 9.85% to that sector. Last month, the best-performing small cap growth sector was materials, but RZG only has a 1.31% weight to that sector. With RZG, if consumer cyclicals don’t carry the day, the burden shifts to healthcare and tech, and it not hard to see why the fund was sluggish last month.

“Drilling down to the industry level, groups within healthcare and technology dragged performance down more than others,” adds Solberg. “Biotechnology lost over 12% in May alone, and solar power saw losses of nearly 32%.”

Bottom line: RZG is being restrained by the growth-to-value rotation. However, it’s still been able to cobble together a decent showing this year, and there are still signs of optimism for small-cap tech and healthcare names. RZG tech holdings have the potential to deliver revenue growth in the back half of the year as demand for chips and electrical components increases.

As Morningstar’s Solberg notes, much of the damage to small cap growth healthcare names in May was inflicted by a small number of stocks, none of which reside in RZG. Additionally, this segment could be boosted by biotechnology consolidation.

For more news, information, and strategy, visit the ETF Education Channel.

Loading Articles...
Help & Info
  • Contact Us
  • About Us
  • Mission Statement
  • Press
Tools
  • ETF Screener
  • ETF Analyzer
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Performance Visualizer
  • ETF Database Model Portfolios
  • ETF Database Realtime Ratings
  • ETF Database Pro
More Tools
  • ETF Launch Center
  • Financial Advisor & RIA Center
  • ETF Database RSS Feed
Explore ETFs
  • ETF News
  • ETF Picks of the Month
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Best ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Legal
  • Terms of Use and Privacy Policy
  • © ETF Flows LLC
Follow ETF Database
Follow ETF Database

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

Equity ETF Channel

Retirement Portfolio Redux: Is the 60%-40% Portfolio Dead?

Debbie CarlsonOct 22, 2020
2020-10-22

With the 10-year U.S. Treasury yield hovering below 1% and Federal Reserve Chairman Jerome Powell...

Equity ETF Channel

Portfolio Diversification Isn't Dead, It Was Just Sleeping

Debbie CarlsonOct 15, 2020
2020-10-15

Investors could be forgiven to think there was no reason to invest outside of the U.S. for the...

}
X