“Value stocks have historically outperformed their growth counterparts in nearly every market studied over long time horizons,” Bryan added. “When it rebalances annually in December, the fund increases its exposure to stocks that have become cheaper relative to their peers and trims its exposure to stocks that have become more expensive.”
However, investors should be aware that since RPV follows a value-weighted indexing methodology, the fund leans toward smaller companies. RPV’s market-capitalization allocations include 47.3% mid-caps, 43.0% large-caps and 9.7% mega-caps.
Investors should also know that while the value tilt does well in bullish conditions, the strategy tends to underperform during market downturns. For instance, in 2008, the S&P 500 Pure Value Index fell behind the Russell Midcap Value and S&P 500 Value indices by 9.4% and 8.7%, respectively.
Guggenheim S&P 500 Pure Value ETF
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