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Is Invesco S&P 500 Equal Weight ETF (RSP) a Strong ETF Right Now?
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Making its debut on 04/24/2003, smart beta exchange traded fund Invesco S&P 500 Equal Weight ETF (RSP - Free Report) provides investors broad exposure to the Style Box - Large Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by Invesco, and has been able to amass over $33.33 billion, which makes it one of the largest ETFs in the Style Box - Large Cap Blend. This particular fund, before fees and expenses, seeks to match the performance of the S&P 500 Equal Weight Index.
The S&P 500 Equal Weight Index equally weights the stocks in the S&P 500 Index.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
With one of the cheaper products in the space, this ETF has annual operating expenses of 0.20%.
It's 12-month trailing dividend yield comes in at 1.32%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
RSP's heaviest allocation is in the Industrials sector, which is about 14% of the portfolio. Its Information Technology and Financials round out the top three.
Looking at individual holdings, Tesla Inc (TSLA - Free Report) accounts for about 0.30% of total assets, followed by Enphase Energy Inc (ENPH - Free Report) and Marathon Oil Corp (MRO - Free Report) .
The top 10 holdings account for about 2.74% of total assets under management.
Performance and Risk
The ETF has lost about -3.51% so far this year and is up about 13.09% in the last one year (as of 03/21/2022). In the past 52-week period, it has traded between $137.90 and $164.20.
RSP has a beta of 1.09 and standard deviation of 24.57% for the trailing three-year period. With about 507 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco S&P 500 Equal Weight ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core S&P 500 ETF (IVV - Free Report) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY - Free Report) tracks S&P 500 Index. IShares Core S&P 500 ETF has $328.39 billion in assets, SPDR S&P 500 ETF has $401.14 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Blend.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Is Invesco S&P 500 Equal Weight ETF (RSP) a Strong ETF Right Now?
Making its debut on 04/24/2003, smart beta exchange traded fund Invesco S&P 500 Equal Weight ETF (RSP - Free Report) provides investors broad exposure to the Style Box - Large Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by Invesco, and has been able to amass over $33.33 billion, which makes it one of the largest ETFs in the Style Box - Large Cap Blend. This particular fund, before fees and expenses, seeks to match the performance of the S&P 500 Equal Weight Index.
The S&P 500 Equal Weight Index equally weights the stocks in the S&P 500 Index.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
With one of the cheaper products in the space, this ETF has annual operating expenses of 0.20%.
It's 12-month trailing dividend yield comes in at 1.32%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
RSP's heaviest allocation is in the Industrials sector, which is about 14% of the portfolio. Its Information Technology and Financials round out the top three.
Looking at individual holdings, Tesla Inc (TSLA - Free Report) accounts for about 0.30% of total assets, followed by Enphase Energy Inc (ENPH - Free Report) and Marathon Oil Corp (MRO - Free Report) .
The top 10 holdings account for about 2.74% of total assets under management.
Performance and Risk
The ETF has lost about -3.51% so far this year and is up about 13.09% in the last one year (as of 03/21/2022). In the past 52-week period, it has traded between $137.90 and $164.20.
RSP has a beta of 1.09 and standard deviation of 24.57% for the trailing three-year period. With about 507 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco S&P 500 Equal Weight ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core S&P 500 ETF (IVV - Free Report) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY - Free Report) tracks S&P 500 Index. IShares Core S&P 500 ETF has $328.39 billion in assets, SPDR S&P 500 ETF has $401.14 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Blend.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.