Buy Low, Sell High with Invesco S&P SmallCap 600 Revenue ETF

Consumer discretionary companies – makers of nonessential consumer goods and services – compose 27% of the fund's assets.

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Bargain-priced shares in small companies have been on a tear lately. The S&P SmallCap 600 Value Index has climbed 72% over the past 12 months. Invesco S&P SmallCap 600 Revenue ETF (RWJ (opens in new tab)) has done even better, gaining 113%.

The exchange-traded fund's (ETF) holdings are weighted by revenues, rather than market value, which helps to "exploit the concept of buy low, sell high," says Invesco's Nick Kalivas.

No matter the reason that stocks run up in price, every three months the fund rebalances based on revenue. That shields the ETF some from fad investing trends. For example, after gaining more than 5,000% over the past 12 months, GameStop (GME (opens in new tab)) is the top holding of the fund's parent index, the market-value-weighted S&P SmallCap 600. In the ETF, GameStop ranks 30th.

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The fund is well positioned for economic growth. Consumer discretionary companies – makers of nonessential consumer goods and services – compose 27% of the fund’s assets, which is 12 percentage points more than its typical peer.

Some consumer discretionary stocks, including Macy's (M (opens in new tab)), a top-10 holding in the ETF, have logged triple-digit gains over the past year. Still, BofA Global Securities strategist Jill Carey Hall counts consumer discretionary as one of her favorite sectors these days. And small-company stocks "look inexpensive" next to large companies, she says.

This ETF is high on returns and high on volatility. It boasts a three-year, 20.1% annualized return that beat 99% of its peers.

chart with stats on Invesco S&P SmallCap 600 Revenue ETF

Nellie S. Huang
Senior Associate Editor, Kiplinger's Personal Finance

Nellie joined Kiplinger in August 2011 after a seven-year stint in Hong Kong. There, she worked for the Wall Street Journal Asia, where as lifestyle editor, she launched and edited Scene Asia, an online guide to food, wine, entertainment and the arts in Asia. Prior to that, she was an editor at Weekend Journal, the Friday lifestyle section of the Wall Street Journal Asia. Kiplinger isn't Nellie's first foray into personal finance: She has also worked at SmartMoney (rising from fact-checker to senior writer), and she was a senior editor at Money.