What Is the S&P 500 Pure Value Index?
The term S&P 500 Pure Value Index refers to a score-weighted index developed by Standard and Poor's (S&P). The index uses what it calls a "style-attractiveness-weighting scheme" and only consists of stocks within the S&P 500 Index that exhibit strong value characteristics. The index was launched in 2005 and consists of 120 constituents, the majority of which are financial services companies.
The index was previously called the S&P 500/Citigroup Pure Value Index because of the relationship between Standard and Poor's, and Citigroup.
- The S&P 500 Pure Value Index is an index comprised of the strongest value stocks on the S&P 500.
- The Pure Value Index was launched in December 2005.
- The index is score-weighted as opposed to market-cap-weighted.
- The index is rebalanced annually and is calculated in U.S. dollars and the South Korean won.
- It is associated with the Invesco S&P 500 Pure Value ETF.
Understanding the S&P 500 Pure Value Index
The S&P 500, is a broad stock market index. Based on the market capitalizations of 500 large companies having common stock listed on the New York Stock Exchange (NYSE) or the Nasdaq, the S&P 500 is one of the most commonly followed equity indices and is generally considered one of the best representations of the U.S. economy and the stock market.
The company launched the S&P 500 Pure Value Index on Dec. 16, 2005, as a style-concentrated index. It is meant to track the performance of stocks that exhibit the strongest value characteristics by using a style-attractiveness-weighting scheme. The index is narrow in focus, as it only contains those S&P 500 companies with value stock characteristics as selected by S&P.
As of July 2022, the index was comprised of 120 different companies. The top five sectors by weight are financials (30.3%), health care (12.3%), consumer staples (10.5%), energy (9.5%) and materials (7.3%). The median market cap for these companies was $47.03 billion. The top five companies listed on the index as of this date were as follows:
- Cigna Corporation (healthcare)
- Berkshire Hathaway B (financials)
- Valero Energy Corp (energy)
- Marathon Petroleum Corp. (energy)
- Allstate Corp (financials)
The index is rebalanced on an annual basis. The index's calculation is done in real-time in both the U.S. dollar (USD) and the South Korean won (KRW).
The S&P 500 Pure Value Index returned 25.92% on a year-to-date (YTD) basis as of April 30, 2021. Its one-year return was 72.32% while the 10-year return totaled 11.65%. It has generally outpaced its benchmark, the S&P 500 Value, which brought in total returns of 14.9%, 40.9%, and 11.27% on a YTD, one-year, and 10-year basis.
The ticker symbol for the S&P 500 Pure Value Index.
The S&P 500 Pure Value Index, which was previously known as the S&P 500/Citigroup Pure Value Index, is among the company's group of style indices. They are derived from what is called a headline or parent index, which also contains the same constituents.
This index is associated with a corresponding exchange-traded fund (ETF) called the Invesco S&P 500 Pure Value ETF. The fund was launched on March 1, 2006, and trades on the NYSE Arca under the ticker symbol RPV. Net assets totaled $2.3 billion as of May 5, 2021.
At least 90% of the fund's capital is invested in the index's constituents. The fund's management fee is 0.35% and its distribution rate was 2.05%. The fund's returns based on its net asset value (NAV) mirrored those of the index, coming at 25.73%, 71.67%, and 11.27% on a YTD, one-year, and 10-year basis.