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Is Invesco S&P 500 Equal Weight Technology ETF (RYT) a Strong ETF Right Now?

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The Invesco S&P 500 Equal Weight Technology ETF (RYT - Free Report) made its debut on 11/01/2006, and is a smart beta exchange traded fund that provides broad exposure to the Technology ETFs 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 offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.

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.

Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other 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

Because the fund has amassed over $2.07 billion, this makes it one of the larger ETFs in the Technology ETFs. RYT is managed by Invesco. This particular fund seeks to match the performance of the S&P 500 Equal Weight Information Technology Index before fees and expenses.

The S&P 500 Equal Weight Information Technology Index equally weights stocks in the information technology 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.

Annual operating expenses for this ETF are 0.40%, making it one of the least expensive products in the space.

It's 12-month trailing dividend yield comes in at 0.65%.

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.

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

When you look at individual holdings, Epam Systems Inc (EPAM - Free Report) accounts for about 1.74% of the fund's total assets, followed by Enphase Energy Inc (ENPH - Free Report) and Arista Networks Inc (ANET - Free Report) .

RYT's top 10 holdings account for about 15.54% of its total assets under management.

Performance and Risk

The ETF has lost about -21.68% and is down about -17.54% so far this year and in the past one year (as of 11/29/2022), respectively. RYT has traded between $220.06 and $327.55 during this last 52-week period.

RYT has a beta of 1.16 and standard deviation of 30.49% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 77 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco S&P 500 Equal Weight Technology ETF is an excellent option for investors seeking to outperform the Technology ETFs segment of the market. There are other ETFs in the space which investors could consider as well.

Technology Select Sector SPDR ETF (XLK - Free Report) tracks Technology Select Sector Index and the Vanguard Information Technology ETF (VGT - Free Report) tracks MSCI US Investable Market Information Technology 25/50 Index. Technology Select Sector SPDR ETF has $40.18 billion in assets, Vanguard Information Technology ETF has $40.64 billion. XLK has an expense ratio of 0.10% and VGT 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 Technology 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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