With a 100% gain within the past 12 months, it’s clear that small caps, value, and momentum are hitting the right notes for the Invesco S&P SmallCap Value with Momentum ETF (XSVM).

At a total expense ratio of 0.39%, XSVM seeks to track the investment results (before fees and expenses) of the S&P Small Cap 600 High Momentum Value Index. The fund generally will invest at least 90% of its total assets in the securities that comprise the underlying index.

Strictly in accordance with its guidelines and mandated procedures, the index provider compiles, maintains, and calculates the underlying index, which is designed to track the performance of approximately 120 stocks in the S&P SmallCap 600® Index that have the highest ‘value’ and ‘momentum’ scores.

XSVM Chart

Small Caps Ousting Their Larger Peers

Small caps have been ousting their large cap peers over the past year, as seen in the MSCI ACWI Large Cap and Small Cap indexes.

“Small stocks so far this year have beaten their large-capitalization brethren by a wider margin than they have in more than two decades, raising questions about what is driving the outperformance and what it means for the overall market ahead,” a Wall Street Journal article said.

^MSACWILCAP Chart

“The year-to-date return for small-caps through the end of February was a remarkable 25 percentage points greater than that of large-caps (as measured by the 20% of stocks with the smallest market caps vs. the comparative quintile of the largest),” the article added. “While it isn’t unexpected for small-cap portfolios to beat large-caps over time—a long-term tendency that Wall Street analysts refer to as the “size effect”—what is unusual is the magnitude of the outperformance. It has averaged just 0.9 percentage point over all two-month periods since 1926, according to data from Dartmouth professor Ken French.”

In the meantime, XSVM is continuing to soar after the ‘golden cross’ made its presence known on September 21, 2020 when the 50-day moving average crossed up the 200-day moving average. Since then, the fund has risen over 90%.

XSVM Chart

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