Small-cap stocks have regained their status as market leaders this year, but smaller stocks with the growth label have truly delivered for investors.
The Guggenheim S&P Smallcap 600Pure Growth ETF (NYSEArca: RZG) confirms as much. RZG is up 10.6% this year, putting the growth fund well ahead of its value counterpart, the Guggenheim S&P Smallcap 600 Pure Value ETF (NYSEArca: RZV). That is saying something because RZV is one of the top-performing non-leveraged ETFs since the start of the current bull market in March 2009. [Honoring the Bull Market With ETFs]
Adding to its list of superlatives, RZG is the second-best broad market ETF on a year-to-date basis, trailing only the First Trust Dorsey Wright Focus 5 ETF (NasdaqGM: FV), according to Dorsey Wright data.
RZG, which debuted in March 2006, has $129.2 million in assets under management. The ETF, which carries a four-star Morningstar rating, tracks the S&P SmallCap 600 Pure Growth Index.
Home to 134 stocks, RZG allocates 21.3% of its weight to financial services stocks. The ETF’s weight to financials gives the fund coverage in multiple interest rate environments. RZG’s healthy allocation to real estate investment trusts (REITs) is a positive in a low rate environment, but as rates rise, the ETF’s exposure to smaller banks and insurance providers should as net interest margins improve for those firms. [Insurance ETFs get a Lift]
A 19.2% weight to healthcare stocks is undoubtedly helping RZG this year. RZG’s healthcare holdings are spread across some of the industry’s hottest sub-sectors, including biotechnology, medical device manufacturers and services providers. Biotechnology and services providers have been fertile grounds for the raft of mergers and acquisitions activity.
Although its trailing 12-month yield is just 0.4%, RZG could become a dividend growth story over time.
Small-cap indexes remain at the low end of the dividend yield totem pole, more than half the members of the S&P SmallCap 600 are dividend payers and there is room for steady payout growth as “182 payers have a dividend rate less than 50% of their 12 month net GAAP income, with 235 being less than 75%,” according to S&P Dow Jones Indices.
Guggenheim S&P Smallcap 600 Pure Growth ETF
