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Is Invesco S&P 500 Equal Weight Utilities ETF (RYU) a Strong ETF Right Now?
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The Invesco S&P 500 Equal Weight Utilities ETF made its debut on 11/01/2006, and is a smart beta exchange traded fund that provides broad exposure to the Utilities/Infrastructure 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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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
RYU is managed by Invesco, and this fund has amassed over $421.88 million, which makes it one of the average sized ETFs in the Utilities/Infrastructure ETFs. 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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for this ETF are 0.40%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 2.33%.
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.
Taking into account individual holdings, Constellation Energy Corp (CEG - Free Report) accounts for about 4.31% of the fund's total assets, followed by Aes Corp/the (AES - Free Report) and Nextera Energy Inc (NEE - Free Report) .
RYU's top 10 holdings account for about 36.39% of its total assets under management.
Performance and Risk
So far this year, RYU has added roughly 0.73%, and is up about 5.99% in the last one year (as of 01/05/2023). During this past 52-week period, the fund has traded between $101.43 and $127.40.
The ETF has a beta of 0.53 and standard deviation of 26.90% 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 $5.70 billion in assets, Utilities Select Sector SPDR ETF has $16.45 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?
The Invesco S&P 500 Equal Weight Utilities ETF made its debut on 11/01/2006, and is a smart beta exchange traded fund that provides broad exposure to the Utilities/Infrastructure 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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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
RYU is managed by Invesco, and this fund has amassed over $421.88 million, which makes it one of the average sized ETFs in the Utilities/Infrastructure ETFs. 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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for this ETF are 0.40%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 2.33%.
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.
Taking into account individual holdings, Constellation Energy Corp (CEG - Free Report) accounts for about 4.31% of the fund's total assets, followed by Aes Corp/the (AES - Free Report) and Nextera Energy Inc (NEE - Free Report) .
RYU's top 10 holdings account for about 36.39% of its total assets under management.
Performance and Risk
So far this year, RYU has added roughly 0.73%, and is up about 5.99% in the last one year (as of 01/05/2023). During this past 52-week period, the fund has traded between $101.43 and $127.40.
The ETF has a beta of 0.53 and standard deviation of 26.90% 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 $5.70 billion in assets, Utilities Select Sector SPDR ETF has $16.45 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.