An ETF that positions us for the market shift towards mid and small caps.
Wall Street indexes have been breaking highs, driven by the momentum of a handful of companies that have monopolized the top cap positions. That trend appears to be changing, and the importance of mid- and small-cap companies appears to be increasing, and we can see that in the evolution of the index. Russell 2000which represents small-cap companies on Wall Street.
If we want to diversify our portfolio and prepare for a possible shift towards greater visibility mid cap And small capa very interesting option with moderate costs is to do it through ETF. We chose Invesco Russell 2000 UCITS ETF (ISIN: IE00B60SX402). From manager Invesco, with the Bloomberg ticker SR2000 GT, launched in March 2009, domiciled in Ireland and with the fund currency quoted in US dollars (no conversion and therefore no currency risk for investors in currencies other than the US dollar):
Investment Philosophy: It is a passively managed investment fund whose objective is repeat Russell 2000 index. This index consists of approximately 2,000 companies with the smallest market capitalizations among the Russell 3000 and therefore reflects the performance of the U.S. small-cap sector. The index is rebalanced quarterly and replicated synthetically using swaps. Dividend policy – reinvestment.
Here is a bit more detail on its composition, divided into sectors:
By geographic location, 96.3% of positions are occupied by US companies:
Top 10 assets of the fund:
Risk levelon a scale of minimum risk 1 and maximum 7, this is a 7. This is a fund that complies with the rules. Classification of UCITS and SFDR Article 6.
Expenses current 0.45%, no entry or exit fees and 0% performance fees.
Total Returnremembering that past income does not guarantee future income: in 10 years +88.23%, in 5 years +26.84%, in 3 years -3.73% and in a year +9.63%.:
Other data of interest:
|
ETF |
1 year |
3 years |
5 years |
10 years |
|
Economic efficiency |
9.63% |
-3.73% |
26.84% |
88.23% |
|
Volatility |
23.31% |
21.93% |
23.71% |
20.4% |
|
Max Drawdown |
-16.78% |
-27.25% |
-30.69% |
-32.65% |
|
Beta |
1 |
1 |
1 |
1 |
|
R squared |
1 |
1 |
1 |
1 |
|
Correlation |
1 |
1 |
1 |
1 |
|
Tracking error |
0.01 |
0.01 |
0,0 |
0,0 |
|
R. Sortino |
0.05 |
– |
0.04 |
0.06 |
|
R. Information |
– |
– |
– |
– |
|
Alpha |
– |
– |
– |
– |
From this data we can conclude that the replication of the benchmark index or benchmark is very tight, with very moderate tracking errors, beta, correlation and R squared around one. In this type of passive fund, with a very close replica of its benchmark index, Alpha has no application. Average volatility is 23%, which is consistent with investments in mid- and small-cap companies.
Thus, it is an exchange-traded fund, ETF, suitable for those investors who seek exposure to mid- and small-cap companies in the United States, with moderate expenses and acceptance of currency risk, long position in US dollars.
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