Looking for broad exposure to the Large Cap Blend segment of the US equity market? You should consider the ALPS Equal Sector Weight ETF (
EQL Quick Quote EQL - Free Report) , a passively managed exchange traded fund launched on 07/07/2009.
The fund is sponsored by Alps. It has amassed assets over $225.75 million, making it one of the average sized ETFs attempting to match the Large Cap Blend segment of the US equity market.
Why Large Cap Blend
Companies that find themselves in the large cap category typically have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.
Blend ETFs are aptly named, since they tend to hold a mix of growth and value stocks, as well as show characteristics of both kinds of equities.
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 0.27%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2%.
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.
Looking at individual holdings, Energy Select Sector Spdr Fund (
XLE Quick Quote XLE - Free Report) accounts for about 11.41% of total assets, followed by Utilities Select Sector Spdr Fund ( XLU Quick Quote XLU - Free Report) and Materials Select Sector Spdr Fund ( XLB Quick Quote XLB - Free Report) .
The top 10 holdings account for about 92% of total assets under management.
Performance and Risk
EQL seeks to match the performance of the NYSE Select Sector Equal Weight Index before fees and expenses. The NYSE Equal Sector Weight Index comprises of all active Select Sector SPDR ETFs in an equal weighted portfolio. These sector includes Consumer Discretionary, Consumer Staples, Materials, Energy, Technology, Utilities, Financial, Industrial, Health Care & Real Estate.
The ETF has lost about -11.15% so far this year and is down about -1.97% in the last one year (as of 07/25/2022). In the past 52-week period, it has traded between $91.12 and $110.50.
The ETF has a beta of 0.95 and standard deviation of 22.96% for the trailing three-year period, making it a medium risk choice in the space. With about 12 holdings, it has more concentrated exposure than peers.
ALPS Equal Sector Weight 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, EQL is a reasonable option for those seeking exposure to the Style Box - Large Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Core S&P 500 ETF (
IVV Quick Quote IVV - Free Report) and the SPDR S&P 500 ETF ( SPY Quick Quote SPY - Free Report) track a similar index. While iShares Core S&P 500 ETF has $292.95 billion in assets, SPDR S&P 500 ETF has $357.85 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%. 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.