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Is Invesco S&P 500 Equal Weight Consumer Discretionary ETF (RCD) a Strong ETF Right Now?
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The Invesco S&P 500 Equal Weight Consumer Discretionary ETF made its debut on 11/01/2006, and is a smart beta exchange traded fund that provides broad exposure to the Consumer Discretionary ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
RCD is managed by Invesco, and this fund has amassed over $296.81 million, which makes it one of the larger ETFs in the Consumer Discretionary ETFs. This particular fund seeks to match the performance of the S&P 500 Equal Weight Consumer Discretionary Index before fees and expenses.
The S&P 500 Equal Weight Consumer Discretionary Index equally weights stocks in the consumer discretionary sector of the S&P 500 Index.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Operating expenses on an annual basis are 0.40% for RCD, making it one of the cheaper products in the space.
The fund has a 12-month trailing dividend yield of 1%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Consumer Discretionary sector - about 100% of the portfolio.
Looking at individual holdings, Las Vegas Sands Corp (LVS - Free Report) accounts for about 2.14% of total assets, followed by Expedia Group Inc (EXPE - Free Report) and Newell Brands Inc (NWL - Free Report) .
The top 10 holdings account for about 19.96% of total assets under management.
Performance and Risk
Year-to-date, the Invesco S&P 500 Equal Weight Consumer Discretionary ETF has lost about -29.61% so far, and is down about -24.97% over the last 12 months (as of 07/07/2022). RCD has traded between $104.87 and $160.55 in this past 52-week period.
RCD has a beta of 1.34 and standard deviation of 31.67% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 62 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco S&P 500 Equal Weight Consumer Discretionary ETF is a reasonable option for investors seeking to outperform the Consumer Discretionary ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Consumer Discretionary ETF (VCR - Free Report) tracks MSCI US Investable Market Consumer Discretionary 25/50 Index and the Consumer Discretionary Select Sector SPDR ETF (XLY - Free Report) tracks Consumer Discretionary Select Sector Index. Vanguard Consumer Discretionary ETF has $4.35 billion in assets, Consumer Discretionary Select Sector SPDR ETF has $14.45 billion. VCR has an expense ratio of 0.10% and XLY charges 0.10%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Consumer Discretionary ETFs.
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 Consumer Discretionary ETF (RCD) a Strong ETF Right Now?
The Invesco S&P 500 Equal Weight Consumer Discretionary ETF made its debut on 11/01/2006, and is a smart beta exchange traded fund that provides broad exposure to the Consumer Discretionary ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
RCD is managed by Invesco, and this fund has amassed over $296.81 million, which makes it one of the larger ETFs in the Consumer Discretionary ETFs. This particular fund seeks to match the performance of the S&P 500 Equal Weight Consumer Discretionary Index before fees and expenses.
The S&P 500 Equal Weight Consumer Discretionary Index equally weights stocks in the consumer discretionary sector of the S&P 500 Index.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Operating expenses on an annual basis are 0.40% for RCD, making it one of the cheaper products in the space.
The fund has a 12-month trailing dividend yield of 1%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Consumer Discretionary sector - about 100% of the portfolio.
Looking at individual holdings, Las Vegas Sands Corp (LVS - Free Report) accounts for about 2.14% of total assets, followed by Expedia Group Inc (EXPE - Free Report) and Newell Brands Inc (NWL - Free Report) .
The top 10 holdings account for about 19.96% of total assets under management.
Performance and Risk
Year-to-date, the Invesco S&P 500 Equal Weight Consumer Discretionary ETF has lost about -29.61% so far, and is down about -24.97% over the last 12 months (as of 07/07/2022). RCD has traded between $104.87 and $160.55 in this past 52-week period.
RCD has a beta of 1.34 and standard deviation of 31.67% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 62 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco S&P 500 Equal Weight Consumer Discretionary ETF is a reasonable option for investors seeking to outperform the Consumer Discretionary ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Consumer Discretionary ETF (VCR - Free Report) tracks MSCI US Investable Market Consumer Discretionary 25/50 Index and the Consumer Discretionary Select Sector SPDR ETF (XLY - Free Report) tracks Consumer Discretionary Select Sector Index. Vanguard Consumer Discretionary ETF has $4.35 billion in assets, Consumer Discretionary Select Sector SPDR ETF has $14.45 billion. VCR has an expense ratio of 0.10% and XLY charges 0.10%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Consumer Discretionary ETFs.
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.