RWK: Performance Not Bad For This Low Valuation ETF

seekingalpha06-06

Ratana21 The Invesco S&P MidCap 400 Revenue ETF (NYSEARCA:RWK) is among those ETFs that follow a different approach away from a most common stock index, such as a typical mid-cap stock index. While ...

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While ...</p>\n\n<a href=\"https://seekingalpha.com/article/4697724-rwk-performance-not-bad-low-valuation-etf\">Source Link</a>\n\n</div>\n","source":"seekingalpha_fund","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>RWK: Performance Not Bad For This Low Valuation ETF</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nRWK: Performance Not Bad For This Low Valuation ETF\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-06-06 18:49 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4697724-rwk-performance-not-bad-low-valuation-etf><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Ratana21 The Invesco S&P MidCap 400 Revenue ETF (NYSEARCA:RWK) is among those ETFs that follow a different approach away from a most common stock index, such as a typical mid-cap stock index. While ...</p>\n\n<a href=\"https://seekingalpha.com/article/4697724-rwk-performance-not-bad-low-valuation-etf\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":".SPX","symbol_name":"S&P 500 Index","start_time":0,"source_url":"https://seekingalpha.com/article/4697724-rwk-performance-not-bad-low-valuation-etf","article_id":"2441797896","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1807483415/image_1807483415.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2441797896","pubTimestamp":1717670968,"sourceInfo":{"source_id":"seekingalpha_fund","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Ratana21 The Invesco S&P MidCap 400 Revenue ETF (NYSEARCA:RWK) is among those ETFs that follow a different approach away from a most common stock index, such as a typical mid-cap stock index. While RW","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{".SPX":"S&P 500 Index","OEX":"标普100","IJH.AU":"ISHARES S&P MID-CAP ETF/AUS","SH":"标普500反向ETF","BK4534":"瑞士信贷持仓","BK4585":"ETF&股票定投概念","SSO":"两倍做多标普500ETF","IVV":"标普500指数ETF","SPXU":"三倍做空标普500ETF","OEF":"标普100指数ETF-iShares","BK4559":"巴菲特持仓","BK4588":"碎股","BK4550":"红杉资本持仓","SPY":"标普500ETF","SPY.AU":"SPDR® S&P 500® ETF Trust","BK4581":"高盛持仓","SDS":"两倍做空标普500ETF","BK4504":"桥水持仓","VOO":"Vanguard标普500ETF","IJH":"标普中型股400指数ETF-iShares","RWK":"RevenueShares Mid Cap ETF","FDN":"First Trust Dow Jones Internet I","UPRO":"三倍做多标普500ETF"},"translate_title":"RWK：这只低估值ETF的表现还不错","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"SPY.AU":1,"SPY":1,"FDN":1,"IJH":1,"IJH.AU":1,"RWK":1,"VOO":0.9,"IVV":0.6,"UPRO":0.6,"SSO":0.6,"SPXU":0.6,"SH":0.6,"SDS":0.6,"OEX":0.6,"OEF":0.6,".SPX":0.6,"ESmain":0.6},"content_text":"Ratana21 The Invesco S&P MidCap 400 Revenue ETF (NYSEARCA:RWK) is among those ETFs that follow a different approach away from a most common stock index, such as a typical mid-cap stock index. While RWK's performance has not been particularly impressive over the years, it has outpaced the S&P MidCap 400 index. However, it has lagged the S&P 500, as mage-caps, notably tech companies, have led the market for quite a while. Despite this, RWK's relatively low, with a price-to-earnings ratio of 12.3x, is a positive for this ETF, as the broader market is currently trading at premium valuations. Overall, this ETF offers an alternative for investors looking to diversify their portfolios and still book long-term returns in the stock market. ETF Description & Highlights RWK is an exchange-traded fund that follows the S&P MidCap 400 Revenue-Weighted Index. This index weighs the securities that constitute the S&P MidCap 400 Index according to the companies' revenue. The components are rebalanced each quarter, and there is a weight cap of 5% for each individual security to prevent an over-concentration of a single stock in the index. As a result of this methodology, the index has a slightly different composition relative to the original S&P MidCap 400 index, with top ten holdings (TD Synnex, Performance Food, Arrow Electronics, US Foods, PBF Energy, AutoNation, HF Sinclair, Avnet) mostly from consumer defensive, technology and energy sectors. In contrast, the S&P MidCap 400 index includes five industrial stocks among its top ten holdings and has no stocks from consumer defensive or energy sectors. There are no significant differences in market cap distribution compared to the original S&P MidCap 400 index, represented here by the iShares Core S&P MidCap ETF (IJH), with nearly one-third of total assets classified as mid-caps and two-thirds as small-caps. At the same time, both RWK and IJH have almost no exposure to large caps, as opposed to the S&P 500, represented by the SPDR S&P 500 ETF Trust (SPY).   Morningstar, consolidated by the author Below is a comparison with a peer group of ETFs focused on mid-cap stocks. The first two in the table (VO and IWR) are among the biggest in the mid-cap category in terms of market cap. VOT has a growth-oriented strategy, while IWS follows a value strategy. The last two (XMHQ and XMMO) are also managed by Invesco, but follow specific stock selection methodologies, such as quality and momentum. As we can see, most of these ETFs are heavily concentrated in mid-cap stocks. However, the last two, managed by Invesco, have portfolios concentrated in fewer than 100 stocks and relevant exposure to small caps, similar to the RWK and the IJH, which is a closer representation of the benchmark for the S&P MidCap 400 index.   Morningstar, consolidated by the author From a sector allocation perspective, as of May 30, 2024, RWK's largest allocation is to the consumer cyclical sector, with 24.4% of total equities, followed by industrials with 19.2%, financials 12.4%, technology 12.1%, consumer defense 9.1%, energy 6.7%, basic materials 6.5%, health care 4.1%, real estate 2.7%, utilities 1.8%, and communication services 1.0%. Relative to the S&P MidCap 400 Index, RWK is overweight in consumer cyclical (+9.2%) and consumer defensive (+4.3%), while it is underweight mainly in real estate (-4.9%) and healthcare (-4.2%).   Morningstar, consolidated by the author Compared to the peer group of mid-cap ETFs, RWK is also overweight in consumer cyclical, but by a larger margin (+13.5%), and consumer defensive (+4.6%) as well, but having an underweight allocation mostly in industrials (-5,5%), technology (-5.2%) and healthcare (-3.9%).   Morningstar, consolidated by the author From a valuation standpoint, RWK appears with much lower multiples, including price/earnings, price/book, and price/sales, compared to the original S&P MidCap 400, as it is not market cap-weighted. On the flip side, growth metrics are mixed, with RWK showing lower historical earnings growth but higher sales growth, which makes sense, as companies with higher sales growth are expected to generate higher revenue over time.   Morningstar, consolidated by the author RWK also has much lower valuation ratios than the peer group of mid-cap ETFs. It is worth mentioning that the peer group average shows higher multiples compared to the S&P MidCap 400, likely influenced by some of the ETFs in the group that are skewed toward growth and momentum strategies.   Morningstar, consolidated by the author Outperformance Over The S&P MidCap 400 RWK's performance has consistently surpassed the S&P MidCap 400, outperforming the benchmark in all timeframes. On the flip side, this is not the case relative to the S&P, where RWK has underperformed in all timeframes, although not by a large margin.   Morningstar, consolidated by the author On a relative basis, compared with the peer group of mid-cap ETFs, RWK has done slightly better than peers on average, as total returns among the mid-cap ETFs have been quite mixed, with momentum and quality strategies outperforming, while others have lagged the S&P MidCap 400.   Morningstar, consolidated by the author The analysis of the risk-adjusted returns shows RWK with better Shape ratios than the S&P MidCap 400, but worse than the S&P 500, which is consistent with the total returns of RKW relative to both benchmarks. On the other hand, we see mixed results when comparing RWK with the peer group of mid-cap ETFs. In addition, RWK's maximum drawdown is the best one for the 3-year period but shows the worst measure at -46.2% for longer timeframes.   Morningstar, consolidated by the author A negative aspect of RWK is its relatively low liquidity, with only $23 K traded daily on average and a bid-ask spread of 0.22%, which is much larger than the IJH spread of 0.017% or the peer group average of 0.095%. This makes RWK less suitable for short-term trades, as its spread may erode a significant portion of the potential profit. In summary, RWK seems like an interesting option to add exposure to mid-cap companies rather than using ETFs that simply follow the S&P MidCap 400 index, such as IJH, which was used here to represent the index. This is due to RWK's higher return delivered over time, without adding significant additional risk, as shown by the Sharp ratios analysis. Furthermore, RWK's relatively low valuation multiples are also an advantage for the time being, as the broader market has been trading at rich valuations, especially in a time when interest rates continue to be a critical driver for short-term price action, and earnings growth is critical to justify new highs.  That said, at this point in time, given RWK's overweight allocation in consumer sectors, I would recommend RWK as diversification for investors that are overweight in sectors that are too tied to economic growth or interest rate moves. Meanwhile, I would wait for a pullback to add shares at better prices.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.2","shortVersion":"4.29.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2441797896"}