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Is Invesco S&P 500 Equal Weight Materials ETF (RTM) a Strong ETF Right Now?
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Making its debut on 11/01/2006, smart beta exchange traded fund Invesco S&P 500 Equal Weight Materials ETF provides investors broad exposure to the Materials ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by Invesco, and has been able to amass over $386.46 million, which makes it one of the average sized ETFs in the Materials ETFs. 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.
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.
Annual operating expenses for RTM are 0.40%, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 2.01%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
For RTM, it has heaviest allocation in the Materials sector --about 100% of the portfolio.
When you look at individual holdings, Air Products And Chemicals Inc (APD - Free Report) accounts for about 3.70% of the fund's total assets, followed by Avery Dennison Corp (AVY - Free Report) and Celanese Corp (CE - Free Report) .
Its top 10 holdings account for approximately 36.56% of RTM's total assets under management.
Performance and Risk
The ETF has added roughly 9.23% and was up about 5.25% so far this year and in the past one year (as of 01/27/2023), respectively. RTM has traded between $141.04 and $190.46 during this last 52-week period.
RTM has a beta of 1.08 and standard deviation of 30.04% for the trailing three-year period, which makes the fund 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 is a reasonable option for investors seeking to outperform the Materials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
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 $6.15 billion in assets, FlexShares Morningstar Global Upstream Natural Resources ETF has $8.02 billion. XLB has an expense ratio of 0.10% and GUNR charges 0.46%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Materials 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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Is Invesco S&P 500 Equal Weight Materials ETF (RTM) a Strong ETF Right Now?
Making its debut on 11/01/2006, smart beta exchange traded fund Invesco S&P 500 Equal Weight Materials ETF provides investors broad exposure to the Materials ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by Invesco, and has been able to amass over $386.46 million, which makes it one of the average sized ETFs in the Materials ETFs. 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.
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.
Annual operating expenses for RTM are 0.40%, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 2.01%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
For RTM, it has heaviest allocation in the Materials sector --about 100% of the portfolio.
When you look at individual holdings, Air Products And Chemicals Inc (APD - Free Report) accounts for about 3.70% of the fund's total assets, followed by Avery Dennison Corp (AVY - Free Report) and Celanese Corp (CE - Free Report) .
Its top 10 holdings account for approximately 36.56% of RTM's total assets under management.
Performance and Risk
The ETF has added roughly 9.23% and was up about 5.25% so far this year and in the past one year (as of 01/27/2023), respectively. RTM has traded between $141.04 and $190.46 during this last 52-week period.
RTM has a beta of 1.08 and standard deviation of 30.04% for the trailing three-year period, which makes the fund 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 is a reasonable option for investors seeking to outperform the Materials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
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 $6.15 billion in assets, FlexShares Morningstar Global Upstream Natural Resources ETF has $8.02 billion. XLB has an expense ratio of 0.10% and GUNR charges 0.46%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Materials 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.