RPV: A Value Investor's Assessment of a Concentrated Pure-Value ETF

The Invesco S&P 500 Pure Value ETF (RPV) is built on a straightforward, concentrated thesis: it seeks to capture the performance of the strongest value stocks within the large-cap U.S. universe. The fund tracks the S&P 500 Pure Value Index, a score-weighted methodology that selects approximately 120 large-cap companies from the S&P 500 based on their value characteristics. This approach is designed to be more targeted than broader value funds, focusing on firms with low price multiples and higher dividend yields.

This focus creates a portfolio that is notably concentrated. As of the latest data, 24.86% of assets are in its top 10 holdings, a level of concentration that significantly exceeds typical broad-market ETFs. This setup means the fund's performance is heavily influenced by a handful of large, value-oriented companies, which can amplify both gains and losses.

The recent track record underscores this concentration's potential. RPV has delivered a total return of 22.43% in the past year, and its year-to-date performance has been robust. This strong showing suggests the fund is effectively capturing a current rally in value stocks. However, for a value investor, the critical question is not about recent noise but about the sustainability of the underlying factor. The fund's long-term success hinges on the value factor continuing to outperform, a cycle that has been notably absent for much of the past decade. The current strong returns may reflect a cyclical shift, but they do not guarantee the sustained outperformance needed for compounding over the long term.

RPV's Pure Value Strategy and Current Performance

The fund's strategy is defined by its methodology. It tracks the S&P 500/Citigroup Pure Value Index, which uses a score-weighted approach to select approximately 106 large-cap U.S. companies from the S&P 500 based on their most pronounced value characteristics. This is a more targeted screen than broader value funds, focusing on firms with low price-to-book ratios, high dividend yields, and other traditional value metrics. The result is a concentrated portfolio where the top 10 holdings command 24.86% of assets, a level that amplifies the influence of any single holding.

Performance data shows the fund has been a strong performer recently. As of early January 2026, RPV posted a 9.43% year-to-date return. Over the past year, its total return was 22.43%, and its five-year annualized return stands at 15.88%. The fund also provides a steady income stream, with a distribution rate of 2.05%.

However, the fund's sector tilt is a critical factor for long-term compounding. Its top holdings are heavily concentrated in cyclical sectors that can be vulnerable in a growth-dominated or economic downturn environment. The portfolio shows a clear bias toward automakers like Ford and General Motors, major healthcare providers such as Centene and Humana, and commodity-focused firms like Bunge and The Mosaic Company. This concentration means the fund's fortunes are tied to the fortunes of these specific industries, which may not always move in tandem with the broader market or with the growth-oriented sectors that have led recent rallies. For a value investor, this raises the question of whether these are durable, wide-moat businesses or simply cyclical names trading at depressed valuations.

Valuation and Risk Assessment

The fund's valuation is a direct reflection of its deep-value mandate. With a P/E ratio of 9.8x, RPV trades at a significant discount to the broader market, which is precisely the point of a pure-value strategy. This low multiple is the price paid for the fund's concentrated exposure to companies that have been overlooked or are facing temporary headwinds. For a value investor, this is the entry point-the market is assigning a low multiple to these businesses, betting they are not worth more.

The primary risk, however, is not the low price but the cyclical sensitivity of the underlying holdings. The portfolio's top sectors, as noted in the index's composition, are heavily weighted toward financials (30.3%) and health care (12.3%). This tilt means the fund's performance is closely tied to economic cycles and interest rate movements. Financials are vulnerable to a downturn in lending and a rise in credit losses, while healthcare providers face pressure from policy changes and cost controls. The recent strong returns may be a cyclical bounce, but the portfolio's structure amplifies its exposure to any reversal in these conditions.

This concentration also magnifies the impact of any single holding's underperformance. As a non-diversified fund, RPV is not required to spread its risk across a wide basket of securities. The top 10 holdings alone command over a quarter of the assets, making the fund's fate dependent on a handful of large, cyclical names. A stumble by a major auto manufacturer or a healthcare payer could have a disproportionate effect on the ETF's returns.

On the cost side, the fund is reasonably efficient. It carries a 0.35% management fee, which is competitive for an actively managed-style ETF. This low cost is a positive, as it ensures that more of the fund's performance is captured by investors. Yet, even a low fee cannot offset the fundamental risk of a concentrated, cyclical portfolio. The bottom line is that RPV offers a cheap entry into a value basket, but investors must be prepared for the volatility that comes with owning a portfolio of large, cyclical businesses that are sensitive to the broader economic cycle.

Comparison to Other Value ETFs and What to Watch

For investors seeking value exposure, RPV is not the only option. It sits in contrast to broader, more liquid funds like the S&P 500 Value Index Fund (IVE). While both target value stocks, their approaches are fundamentally different. IVE uses a more liberal definition, including securities that also appear in its growth counterpart. RPV, by contrast, maintains a "pure value" focus, holding a relatively small number of firms that demonstrate the most significant value characteristics. This makes RPV a more targeted, and consequently more concentrated, bet on the value factor.

The numbers reflect this difference. RPV's portfolio of approximately 106 holdings is far leaner than the broader market's typical basket. Its concentration is stark: the top 10 holdings command 24.86% of assets, a level that exceeds even the average for its peer group. This is the trade-off for a purer signal. Investors gain a sharper focus on deep-value companies but accept greater vulnerability to the performance of a handful of large, cyclical names.

The catalyst for RPV's future success is clear: a sustained re-rating of value stocks. The fund's strong recent performance suggests this shift may be underway. For a value investor, the goal is to buy businesses trading below their intrinsic value and wait for the market to recognize that gap. RPV provides a vehicle to do that, but only if the value factor continues its current outperformance cycle.

The main risk, then, is a prolonged growth rally that widens the valuation gap between growth and value. If investors continue to favor high-multiple, growth-oriented companies, the concentrated, low-multiple holdings in RPV could remain stagnant or underperform for an extended period. This would test the patience of a value investor, as the fund's structure amplifies the impact of any such divergence.

What should investors watch? First, monitor the fund's sector concentration. Its heavy tilt toward financials (30.3%) and health care (12.3%) means its fortunes are tied to economic cycles and policy changes in those industries. Second, track its ability to generate consistent distributions, which provides a tangible return while waiting for capital appreciation. Finally, and most importantly, watch the overall health of the value factor in the coming quarters. The setup is a classic value bet: a concentrated portfolio of large, cyclical businesses trading at a deep discount. The outcome hinges on whether the market's patience for growth pays off-or if value's long-overdue turn is just beginning.