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Should You Invest in the Invesco S&P 500 Equal Weight Utilities ETF (RYU)?

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Looking for broad exposure to the Utilities - Broad segment of the equity market? You should consider the Invesco S&P 500 Equal Weight Utilities ETF (RYU - Free Report) , a passively managed exchange traded fund launched on 11/01/2006.

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Utilities - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 15, placing it in bottom 6%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $213.34 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.

Costs

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 2.53%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, 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, Nrg Energy Inc (NRG - Free Report) accounts for about 4.03% of total assets, followed by Nextera Energy Inc (NEE - Free Report) and American Electric Power Co Inc (AEP - Free Report) .

The top 10 holdings account for about 36.79% of total assets under management.

Performance and Risk

The ETF has added roughly 14.48% so far this year and was up about 18.04% in the last one year (as of 08/25/2021). In that past 52-week period, it has traded between $90.55 and $112.38.

The ETF has a beta of 0.41 and standard deviation of 25.21% 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.

Alternatives

Invesco S&P 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 - 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 $5.07 billion in assets, Utilities Select Sector SPDR ETF has $13.38 billion. VPU has an expense ratio of 0.10% and XLU charges 0.12%.

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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