Making its debut on 12/23/2014, smart beta exchange traded fund Invesco Russell 1000 Equal Weight ETF (
EQAL Quick Quote EQAL - Free Report) provides investors broad exposure to the Style Box - Large Cap Blend category of the market. What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is managed by Invesco. EQAL has been able to amass assets over $696.71 million, making it one of the average sized ETFs in the Style Box - Large Cap Blend. This particular fund seeks to match the performance of the Russell 1000 Equal Weight Index before fees and expenses.
The Russell 1000 Equal Weight Index is composed of securities in the Russell 1000 Index and is equally weighted across nine sector groups with each security within the sector receiving equal weight.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Operating expenses on an annual basis are 0.20% for EQAL, making it one of the cheaper products in the space.
The fund has a 12-month trailing dividend yield of 1.48%.
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 Information Technology sector - about 14.80% of the portfolio. Industrials and Financials round out the top three.
When you look at individual holdings, Roku Inc (
ROKU Quick Quote ROKU - Free Report) accounts for about 0.56% of the fund's total assets, followed by Liberty Broadband Corp ( LBRDK Quick Quote LBRDK - Free Report) and Cable One Inc ( CABO Quick Quote CABO - Free Report) .
Its top 10 holdings account for approximately 4.78% of EQAL's total assets under management.
Performance and Risk
The ETF has added roughly 25% and was up about 46.57% so far this year and in the past one year (as of 11/03/2021), respectively. EQAL has traded between $33.57 and $47.46 during this last 52-week period.
EQAL has a beta of 1.16 and standard deviation of 24.62% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 1012 holdings, it effectively diversifies company-specific risk.
Invesco Russell 1000 Equal Weight ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core S&P 500 ETF (
IVV Quick Quote IVV - Free Report) tracks S&P 500 Index and the SPDR S&P 500 ETF ( SPY Quick Quote SPY - Free Report) tracks S&P 500 Index. IShares Core S&P 500 ETF has $318.26 billion in assets, SPDR S&P 500 ETF has $419.67 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Blend.
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.