Designed to provide broad exposure to the Materials - Broad segment of the equity market, the Invesco S&P 500 Equal Weight Materials ETF is a passively managed exchange traded fund launched on 11/01/2006.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Materials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 11, placing it in bottom 31%.
The fund is sponsored by Invesco. It has amassed assets over $341.61 million, making it one of the average sized ETFs attempting to match the performance of the Materials - Broad segment of the equity market. 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.
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.40%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 2.79%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Materials sector--about 100% of the portfolio.
Looking at individual holdings, Air Products And Chemicals Inc (
APD Quick Quote APD - Free Report) accounts for about 3.70% of total assets, followed by Avery Dennison Corp ( AVY Quick Quote AVY - Free Report) and Celanese Corp ( CE Quick Quote CE - Free Report) .
The top 10 holdings account for about 36.56% of total assets under management.
Performance and Risk
The ETF has lost about -1.92% so far this year and is down about -12.25% in the last one year (as of 03/21/2023). In that past 52-week period, it has traded between $141.04 and $190.46.
The ETF has a beta of 1.11 and standard deviation of 26.41% for the trailing three-year period, making it a medium risk choice in the space. With about 29 holdings, it has more concentrated exposure than peers.
Invesco S&P 500 Equal Weight Materials ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, RTM is a reasonable option for those seeking exposure to the Materials ETFs area of the market. Investors might also want to consider some other ETF options in the space.
Materials Select Sector SPDR ETF (
XLB Quick Quote XLB - Free Report) tracks Materials Select Sector Index and the FlexShares Morningstar Global Upstream Natural Resources ETF ( GUNR Quick Quote GUNR - Free Report) tracks Morningstar Global Upstream Natural Resources Index. Materials Select Sector SPDR ETF has $5.39 billion in assets, FlexShares Morningstar Global Upstream Natural Resources ETF has $7.09 billion. XLB has an expense ratio of 0.10% and GUNR charges 0.46%. Bottom Line
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