The Invesco SP 500 Equal Weight Utilities ETF (
RYU Quick Quote RYU - Free Report) was launched on 11/01/2006, and is a passively managed exchange traded fund designed to offer broad exposure to the Utilities - Broad segment of the equity market.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Utilities - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 13, placing it in bottom 19%.
The fund is sponsored by Invesco. It has amassed assets over $249 million, making it one of the average sized ETFs attempting to match the performance of the Utilities - Broad segment of the equity market. RYU seeks to match the performance of the S&P 500 Equal Weight Telecommunication Services & Utilities Index before fees and expenses.
This index is an unmanaged equal weighted version of the S&P 500 Utilities Index that consists of common stocks of the following industries: electric utilities, gas utilities, multi-utilities & unregulated power & water utilities,telecommunication service companies, including fixed-line, cellular, wireless, high bandwidth & fiber-optic cable networks.
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts 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.
It has a 12-month trailing dividend yield of 2.89%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Utilities sector--about 100% of the portfolio.
Looking at individual holdings, Exelon Corp (
EXC Quick Quote EXC - Free Report) accounts for about 3.85% of total assets, followed by American Electric Power Co Inc ( AEP Quick Quote AEP - Free Report) and Edison International ( EIX Quick Quote EIX - Free Report) .
The top 10 holdings account for about 37.21% of total assets under management.
Performance and Risk
Year-to-date, the Invesco SP 500 Equal Weight Utilities ETF has lost about -2.28% so far, and was up about 1.20% over the last 12 months (as of 11/08/2020). RYU has traded between $72.27 and $115.50 in this past 52-week period.
The ETF has a beta of 0.39 and standard deviation of 24.85% for the trailing three-year period, making it a medium risk choice in the space. With about 29 holdings, it has more concentrated exposure than peers.
Invesco SP 500 Equal Weight Utilities ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, RYU is a reasonable option for those seeking exposure to the Utilities/Infrastructure ETFs area of the market. Investors might also want to consider some other ETF options in the space.
Vanguard Utilities ETF (
VPU Quick Quote VPU - Free Report) tracks MSCI US Investable Market Utilities 25/50 Index and the Utilities Select Sector SPDR ETF ( XLU Quick Quote XLU - Free Report) tracks Utilities Select Sector Index. Vanguard Utilities ETF has $4.46 billion in assets, Utilities Select Sector SPDR ETF has $11.98 billion. VPU has an expense ratio of 0.10% and XLU charges 0.13%. Bottom Line
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