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Is Invesco S&P 500 Equal Weight Consumer Staples ETF (RHS) a Strong ETF Right Now?

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A smart beta exchange traded fund, the Invesco S&P 500 Equal Weight Consumer Staples ETF (RHS - Free Report) debuted on 11/01/2006, and offers broad exposure to the Consumer Staples ETFs category of the market.

What Are Smart Beta ETFs?

Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.

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.

If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.

Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.

Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.

Fund Sponsor & Index

The fund is managed by Invesco. RHS has been able to amass assets over $637.41 million, making it one of the average sized ETFs in the Consumer Staples ETFs. Before fees and expenses, this particular fund seeks to match the performance of the S&P 500 Equal Weight Consumer Staples Index.

The S&P 500 Equal Weight Consumer Staples Index equally weights stocks in the consumer staples sector of the S&P 500 Index.

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.

With on par with most peer products in the space, this ETF has annual operating expenses of 0.40%.

It has a 12-month trailing dividend yield of 2.45%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

For RHS, it has heaviest allocation in the Consumer Staples sector --about 100% of the portfolio.

Looking at individual holdings, Monster Beverage Corp (MNST - Free Report) accounts for about 3.19% of total assets, followed by Estee Lauder Cos Inc/the (EL - Free Report) and Lamb Weston Holdings Inc (LW - Free Report) .

The top 10 holdings account for about 31.3% of total assets under management.

Performance and Risk

The ETF has lost about -2.12% and it's up approximately 5.50% so far this year and in the past one year (as of 09/14/2022), respectively. RHS has traded between $153.68 and $180.71 during this last 52-week period.

The ETF has a beta of 0.57 and standard deviation of 19.22% for the trailing three-year period, making it a medium risk choice in the space. With about 34 holdings, it has more concentrated exposure than peers.

Alternatives

Invesco S&P 500 Equal Weight Consumer Staples ETF is not a suitable option for investors seeking to outperform the Consumer Staples ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.

Vanguard Consumer Staples ETF (VDC - Free Report) tracks MSCI US Investable Market Consumer Staples 25/50 Index and the Consumer Staples Select Sector SPDR ETF (XLP - Free Report) tracks Consumer Staples Select Sector Index. Vanguard Consumer Staples ETF has $6.60 billion in assets, Consumer Staples Select Sector SPDR ETF has $15.12 billion. VDC has an expense ratio of 0.10% and XLP charges 0.10%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Consumer Staples ETFs.

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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