The Invesco S&P 500 Equal Weight Consumer Discretionary ETF (
RCD Quick Quote RCD - Free Report) was launched on 11/01/2006, and is a passively managed exchange traded fund designed to offer broad exposure to the Consumer Discretionary - Broad segment of the equity market.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Consumer Discretionary - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 5, placing it in top 31%.
The fund is sponsored by Invesco. It has amassed assets over $797.62 million, making it one of the larger ETFs attempting to match the performance of the Consumer Discretionary - Broad segment of the equity market. RCD 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 is an unmanaged equal weighted version of the S&P 500 Consumer Discretionary Index that consists of common stocks of companies that comprise the Consumer Discretionary Sector of the S&P 500 Index.
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
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 0.38%.
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 Consumer Discretionary sector--about 100% of the portfolio.
Looking at individual holdings, Nike Inc (
NKE Quick Quote NKE - Free Report) accounts for about 1.95% of total assets, followed by Etsy Inc ( ETSY Quick Quote ETSY - Free Report) and Chipotle Mexican Grill Inc ( CMG Quick Quote CMG - Free Report) .
The top 10 holdings account for about 18.08% of total assets under management.
Performance and Risk
The ETF has added about 25.03% and is up about 50.02% so far this year and in the past one year (as of 08/16/2021), respectively. RCD has traded between $99.54 and $151.95 during this last 52-week period.
The ETF has a beta of 1.43 and standard deviation of 29.27% for the trailing three-year period, making it a medium risk choice in the space. With about 65 holdings, it effectively diversifies company-specific risk.
Invesco S&P 500 Equal Weight Consumer Discretionary 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, RCD is a sufficient option for those seeking exposure to the Consumer Discretionary ETFs area of the market. Investors might also want to consider some other ETF options in the space.
Vanguard Consumer Discretionary ETF (
VCR Quick Quote VCR - Free Report) tracks MSCI US Investable Market Consumer Discretionary 25/50 Index and the Consumer Discretionary Select Sector SPDR ETF ( XLY Quick Quote XLY - Free Report) tracks Consumer Discretionary Select Sector Index. Vanguard Consumer Discretionary ETF has $6.30 billion in assets, Consumer Discretionary Select Sector SPDR ETF has $19.65 billion. VCR has an expense ratio of 0.10% and XLY charges 0.12%. Bottom Line
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