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Is Invesco S&P 500 Equal Weight Utilities ETF (RYU) a Strong ETF Right Now?
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Making its debut on 11/01/2006, smart beta exchange traded fund Invesco S&P 500 Equal Weight Utilities ETF provides investors broad exposure to the Utilities/Infrastructure ETFs 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.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination 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
Because the fund has amassed over $433.20 million, this makes it one of the average sized ETFs in the Utilities/Infrastructure ETFs. RYU is managed by Invesco. RYU, before fees and expenses, seeks to match the performance of the S&P 500 Equal Weight Telecommunication Services & Utilities Index.
The S&P 500 Equal Weight Telecommunication Services & Utilities Index equally weights stocks found in the utilities and telecommunication services sectors of the S&P 500 Index.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
With one of the cheaper products in the space, this ETF has annual operating expenses of 0.40%.
It's 12-month trailing dividend yield comes in at 2.18%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 100% of the portfolio, the fund has heaviest allocation to the Utilities sector.
When you look at individual holdings, Aes Corp/the (AES - Free Report) accounts for about 3.67% of the fund's total assets, followed by Nextera Energy Inc (NEE - Free Report) and American Water Works Co Inc (AWK - Free Report) .
RYU's top 10 holdings account for about 35.25% of its total assets under management.
Performance and Risk
The ETF has gained about 10.11% and is up roughly 14.29% so far this year and in the past one year (as of 08/29/2022), respectively. RYU has traded between $102.46 and $126.69 during this last 52-week period.
The ETF has a beta of 0.49 and standard deviation of 25.77% for the trailing three-year period, making it a medium risk choice in the space. With about 30 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco S&P 500 Equal Weight Utilities ETF is a reasonable option for investors seeking to outperform the Utilities/Infrastructure ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Utilities ETF (VPU - Free Report) tracks MSCI US Investable Market Utilities 25/50 Index and the Utilities Select Sector SPDR ETF (XLU - Free Report) tracks Utilities Select Sector Index. Vanguard Utilities ETF has $6.01 billion in assets, Utilities Select Sector SPDR ETF has $17.78 billion. VPU has an expense ratio of 0.10% and XLU 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 Utilities/Infrastructure 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 Utilities ETF (RYU) a Strong ETF Right Now?
Making its debut on 11/01/2006, smart beta exchange traded fund Invesco S&P 500 Equal Weight Utilities ETF provides investors broad exposure to the Utilities/Infrastructure ETFs 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.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination 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
Because the fund has amassed over $433.20 million, this makes it one of the average sized ETFs in the Utilities/Infrastructure ETFs. RYU is managed by Invesco. RYU, before fees and expenses, seeks to match the performance of the S&P 500 Equal Weight Telecommunication Services & Utilities Index.
The S&P 500 Equal Weight Telecommunication Services & Utilities Index equally weights stocks found in the utilities and telecommunication services sectors of the S&P 500 Index.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
With one of the cheaper products in the space, this ETF has annual operating expenses of 0.40%.
It's 12-month trailing dividend yield comes in at 2.18%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 100% of the portfolio, the fund has heaviest allocation to the Utilities sector.
When you look at individual holdings, Aes Corp/the (AES - Free Report) accounts for about 3.67% of the fund's total assets, followed by Nextera Energy Inc (NEE - Free Report) and American Water Works Co Inc (AWK - Free Report) .
RYU's top 10 holdings account for about 35.25% of its total assets under management.
Performance and Risk
The ETF has gained about 10.11% and is up roughly 14.29% so far this year and in the past one year (as of 08/29/2022), respectively. RYU has traded between $102.46 and $126.69 during this last 52-week period.
The ETF has a beta of 0.49 and standard deviation of 25.77% for the trailing three-year period, making it a medium risk choice in the space. With about 30 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco S&P 500 Equal Weight Utilities ETF is a reasonable option for investors seeking to outperform the Utilities/Infrastructure ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Utilities ETF (VPU - Free Report) tracks MSCI US Investable Market Utilities 25/50 Index and the Utilities Select Sector SPDR ETF (XLU - Free Report) tracks Utilities Select Sector Index. Vanguard Utilities ETF has $6.01 billion in assets, Utilities Select Sector SPDR ETF has $17.78 billion. VPU has an expense ratio of 0.10% and XLU 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 Utilities/Infrastructure 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.