Back to top

Image: Bigstock

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

Read MoreHide Full Article

Designed to provide broad exposure to the Energy ETFs category of the market, the Invesco S&P 500 Equal Weight Energy ETF (RYE - Free Report) is a smart beta exchange traded fund launched on 11/01/2006.

What Are Smart Beta ETFs?

The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the 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.

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. RYE has been able to amass assets over $607.88 million, making it one of the larger ETFs in the Energy ETFs. Before fees and expenses, RYE seeks to match the performance of the S&P 500 Equal Weight Energy Index.

The S&P 500 Equal Weight Energy Plus Index equally weights stocks in the energy sector of the S&P 500 Index.

Cost & Other Expenses

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

With one of the cheaper products in the space, this ETF has annual operating expenses of 0.40%.

RYE's 12-month trailing dividend yield is 3.32%.

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 RYE, it has heaviest allocation in the Energy sector --about 100% of the portfolio.

Looking at individual holdings, Halliburton Co (HAL - Free Report) accounts for about 4.64% of total assets, followed by Schlumberger Ltd (SLB - Free Report) and Apa Corp (APA - Free Report) .

Its top 10 holdings account for approximately 44.41% of RYE's total assets under management.

Performance and Risk

So far this year, RYE has added about 3.37%, and is up roughly 44.49% in the last one year (as of 01/25/2023). During this past 52-week period, the fund has traded between $56.15 and $81.27.

The ETF has a beta of 1.61 and standard deviation of 49.39% for the trailing three-year period, making it a high risk choice in the space. With about 24 holdings, it has more concentrated exposure than peers.


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

Vanguard Energy ETF (VDE - Free Report) tracks MSCI US Investable Market Energy 25/50 Index and the Energy Select Sector SPDR ETF (XLE - Free Report) tracks Energy Select Sector Index. Vanguard Energy ETF has $8.62 billion in assets, Energy Select Sector SPDR ETF has $42.18 billion. VDE has an expense ratio of 0.10% and XLE 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 Energy 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.

Published in