Back to top

Image: Bigstock

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

Read MoreHide Full Article

Launched on 11/01/2006, the Invesco S&P 500 Equal Weight Materials ETF (RTM - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Materials - 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.

Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Materials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 4, placing it in top 25%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $572.26 million, making it one of the average sized ETFs attempting to match the performance of the Materials - Broad segment of the equity market. RTM seeks to match the performance of the S&P 500 Equal Weight Materials Index before fees and expenses.

The S&P 500 Equal Weight Materials Index equally weights stocks in the materials sector of the S&P 500 Index.

Costs

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.

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 1.54%.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Materials sector--about 100% of the portfolio.

Looking at individual holdings, Mosaic Co/the (MOS - Free Report) accounts for about 5.81% of total assets, followed by Cf Industries Holdings Inc (CF - Free Report) and Newmont Corp (NEM - Free Report) .

The top 10 holdings account for about 44.56% of total assets under management.

Performance and Risk

Year-to-date, the Invesco S&P 500 Equal Weight Materials ETF has lost about -2.09% so far, and was up about 0.28% over the last 12 months (as of 05/10/2022). RTM has traded between $156.98 and $190.46 in this past 52-week period.

The ETF has a beta of 1.04 and standard deviation of 28.26% 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 Materials 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, RTM is a reasonable option for those seeking exposure to the Materials ETFs area of the market. Investors might also want to consider some other ETF options in the space.

Materials Select Sector SPDR ETF (XLB - Free Report) tracks Materials Select Sector Index and the FlexShares Morningstar Global Upstream Natural Resources ETF (GUNR - Free Report) tracks Morningstar Global Upstream Natural Resources Index. Materials Select Sector SPDR ETF has $7.20 billion in assets, FlexShares Morningstar Global Upstream Natural Resources ETF has $7.77 billion. XLB has an expense ratio of 0.10% and GUNR charges 0.46%.

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.

Published in