We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is Invesco S&P 500 Equal Weight Energy ETF (RYE) a Strong ETF Right Now?
Read MoreHide Full Article
Launched on 11/01/2006, the Invesco S&P 500 Equal Weight Energy ETF is a smart beta exchange traded fund offering broad exposure to the Energy 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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well 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.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by Invesco. RYE has been able to amass assets over $496.62 million, making it one of the average sized ETFs in the Energy ETFs. This particular fund, before fees and expenses, seeks to match the performance of the S&P 500 Equal Weight Energy Index.
The S&P 500 Equal Weight Energy Plus Index equally weights stocks in the energy sector 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.
Annual operating expenses for this ETF are 0.40%, making it one of the cheaper products in the space.
The fund has a 12-month trailing dividend yield of 3.51%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
RYE's heaviest allocation is in the Energy sector, which is about 100% of the portfolio.
Taking into account individual holdings, Occidental Petroleum Corp (OXY - Free Report) accounts for about 5.11% of the fund's total assets, followed by Kinder Morgan Inc (KMI - Free Report) and Exxon Mobil Corp (XOM - Free Report) .
The top 10 holdings account for about 47.64% of total assets under management.
Performance and Risk
So far this year, RYE return is roughly 38.20%, and was up about 64.44% in the last one year (as of 09/20/2022). During this past 52-week period, the fund has traded between $40.25 and $81.27.
RYE has a beta of 1.62 and standard deviation of 48.50% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 24 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco S&P 500 Equal Weight Energy ETF is an excellent option for investors seeking to outperform the Energy ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
Vanguard Energy ETF (VDE - Free Report) tracks MSCI US Investable Market Energy 25/50 Index and the Energy Select Sector SPDR ETF (XLE - Free Report) tracks Energy Select Sector Index. Vanguard Energy ETF has $7.75 billion in assets, Energy Select Sector SPDR ETF has $35.74 billion. VDE has an expense ratio of 0.10% and XLE 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 Energy 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.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Is Invesco S&P 500 Equal Weight Energy ETF (RYE) a Strong ETF Right Now?
Launched on 11/01/2006, the Invesco S&P 500 Equal Weight Energy ETF is a smart beta exchange traded fund offering broad exposure to the Energy 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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well 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.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by Invesco. RYE has been able to amass assets over $496.62 million, making it one of the average sized ETFs in the Energy ETFs. This particular fund, before fees and expenses, seeks to match the performance of the S&P 500 Equal Weight Energy Index.
The S&P 500 Equal Weight Energy Plus Index equally weights stocks in the energy sector 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.
Annual operating expenses for this ETF are 0.40%, making it one of the cheaper products in the space.
The fund has a 12-month trailing dividend yield of 3.51%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
RYE's heaviest allocation is in the Energy sector, which is about 100% of the portfolio.
Taking into account individual holdings, Occidental Petroleum Corp (OXY - Free Report) accounts for about 5.11% of the fund's total assets, followed by Kinder Morgan Inc (KMI - Free Report) and Exxon Mobil Corp (XOM - Free Report) .
The top 10 holdings account for about 47.64% of total assets under management.
Performance and Risk
So far this year, RYE return is roughly 38.20%, and was up about 64.44% in the last one year (as of 09/20/2022). During this past 52-week period, the fund has traded between $40.25 and $81.27.
RYE has a beta of 1.62 and standard deviation of 48.50% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 24 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco S&P 500 Equal Weight Energy ETF is an excellent option for investors seeking to outperform the Energy ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
Vanguard Energy ETF (VDE - Free Report) tracks MSCI US Investable Market Energy 25/50 Index and the Energy Select Sector SPDR ETF (XLE - Free Report) tracks Energy Select Sector Index. Vanguard Energy ETF has $7.75 billion in assets, Energy Select Sector SPDR ETF has $35.74 billion. VDE has an expense ratio of 0.10% and XLE 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 Energy 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.