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Is Invesco S&P 500 Equal Weight Utilities ETF (RYU) a Strong ETF Right Now?
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The Invesco S&P 500 Equal Weight Utilities ETF was launched on 11/01/2006, and is a smart beta exchange traded fund designed to offer broad exposure to the Utilities/Infrastructure 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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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, and has been able to amass over $381.71 million, which makes it one of the average sized ETFs in the Utilities/Infrastructure ETFs. Before fees and expenses, this particular fund seeks to match the performance of the S&P 500 Equal Weight Telecommunication Services & Utilities Index.
The S&P 500 Equal Weight Telecommunication Services & Utilities Index equally weights stocks found in the utilities and telecommunication services sectors 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 one of the cheaper 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
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
RYU's heaviest allocation is in the Utilities sector, which is about 100% of the portfolio.
Taking into account individual holdings, Pg&e Corp (PCG - Free Report) accounts for about 3.42% of the fund's total assets, followed by Dominion Energy Inc (D - Free Report) and Exelon Corp (EXC - Free Report) .
RYU's top 10 holdings account for about 30.35% of its total assets under management.
Performance and Risk
Year-to-date, the Invesco S&P 500 Equal Weight Utilities ETF has lost about -4.07% so far, and is down about -0.55% over the last 12 months (as of 03/07/2023). RYU has traded between $101.43 and $127.40 in this past 52-week period.
RYU has a beta of 0.54 and standard deviation of 26.54% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 32 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco S&P 500 Equal Weight Utilities ETF is not a suitable option for investors seeking to outperform the Utilities/Infrastructure ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
Vanguard Utilities ETF (VPU - Free Report) tracks MSCI US Investable Market Utilities 25/50 Index and the Utilities Select Sector SPDR ETF (XLU - Free Report) tracks Utilities Select Sector Index. Vanguard Utilities ETF has $5.32 billion in assets, Utilities Select Sector SPDR ETF has $15.07 billion. VPU has an expense ratio of 0.10% and XLU 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 Utilities/Infrastructure 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 Utilities ETF (RYU) a Strong ETF Right Now?
The Invesco S&P 500 Equal Weight Utilities ETF was launched on 11/01/2006, and is a smart beta exchange traded fund designed to offer broad exposure to the Utilities/Infrastructure 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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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, and has been able to amass over $381.71 million, which makes it one of the average sized ETFs in the Utilities/Infrastructure ETFs. Before fees and expenses, this particular fund seeks to match the performance of the S&P 500 Equal Weight Telecommunication Services & Utilities Index.
The S&P 500 Equal Weight Telecommunication Services & Utilities Index equally weights stocks found in the utilities and telecommunication services sectors 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 one of the cheaper 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
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
RYU's heaviest allocation is in the Utilities sector, which is about 100% of the portfolio.
Taking into account individual holdings, Pg&e Corp (PCG - Free Report) accounts for about 3.42% of the fund's total assets, followed by Dominion Energy Inc (D - Free Report) and Exelon Corp (EXC - Free Report) .
RYU's top 10 holdings account for about 30.35% of its total assets under management.
Performance and Risk
Year-to-date, the Invesco S&P 500 Equal Weight Utilities ETF has lost about -4.07% so far, and is down about -0.55% over the last 12 months (as of 03/07/2023). RYU has traded between $101.43 and $127.40 in this past 52-week period.
RYU has a beta of 0.54 and standard deviation of 26.54% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 32 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco S&P 500 Equal Weight Utilities ETF is not a suitable option for investors seeking to outperform the Utilities/Infrastructure ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
Vanguard Utilities ETF (VPU - Free Report) tracks MSCI US Investable Market Utilities 25/50 Index and the Utilities Select Sector SPDR ETF (XLU - Free Report) tracks Utilities Select Sector Index. Vanguard Utilities ETF has $5.32 billion in assets, Utilities Select Sector SPDR ETF has $15.07 billion. VPU has an expense ratio of 0.10% and XLU 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 Utilities/Infrastructure 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.