Launched on 10/01/2013, the Invesco S&P Ultra Dividend Revenue ETF (
RDIV Quick Quote RDIV - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Large Cap Value segment of the US equity market.
The fund is sponsored by Invesco. It has amassed assets over $734.77 million, making it one of the average sized ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Companies that find themselves in the large cap category typically have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.
While value stocks have lower than average price-to-earnings and price-to-book ratios, they also have lower than average sales and earnings growth rates. Considering long-term performance, value stocks have outperformed growth stocks in almost all markets; however, they are more likely to underperform growth stocks in strong bull markets.
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for this ETF are 0.39%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 4.72%.
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.
This ETF has heaviest allocation to the Financials sector--about 21.80% of the portfolio. Materials and Information Technology round out the top three.
Looking at individual holdings, Phillips 66 (
PSX Quick Quote PSX - Free Report) accounts for about 5.67% of total assets, followed by Occidental Petroleum Corp ( OXY Quick Quote OXY - Free Report) and Pfizer Inc ( PFE Quick Quote PFE - Free Report) .
The top 10 holdings account for about 49.85% of total assets under management.
Performance and Risk
RDIV seeks to match the performance of the OFI Revenue Weighted Ultra Dividend Index before fees and expenses. The OFI Revenue Weighted Ultra Dividend Index is constructed by identifying the top 60 securities from the S&P 900 Index with the highest average of the 1-year trailing dividend yields for the current quarter and each of the past three quarters which are then re-weighted according to the revenue earned by the companies.
The ETF has added roughly 24.08% so far this year and was up about 48.56% in the last one year (as of 08/27/2021). In the past 52-week period, it has traded between $26.28 and $43.55.
The ETF has a beta of 1.31 and standard deviation of 31.41% for the trailing three-year period, making it a medium risk choice in the space. With about 60 holdings, it effectively diversifies company-specific risk.
Invesco S&P Ultra Dividend Revenue ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, RDIV is an outstanding option for investors seeking exposure to the Style Box - Large Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Russell 1000 Value ETF (
IWD Quick Quote IWD - Free Report) and the Vanguard Value ETF ( VTV Quick Quote VTV - Free Report) track a similar index. While iShares Russell 1000 Value ETF has $55.02 billion in assets, Vanguard Value ETF has $84.49 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%. Bottom-Line
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.
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.