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Is Invesco S&P 500 Equal Weight Energy ETF (RYE) a Strong ETF Right Now?
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The Invesco S&P 500 Equal Weight Energy ETF made its debut on 11/01/2006, and is a smart beta exchange traded fund that provides broad exposure to the Energy 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 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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
Because the fund has amassed over $485.09 million, this makes it one of the average sized ETFs in the Energy ETFs. RYE is managed by Invesco. This particular fund seeks to match the performance of the S&P 500 Equal Weight Energy Index before fees and expenses.
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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Operating expenses on an annual basis are 0.40% for RYE, making it one of the cheaper products in the space.
The fund has a 12-month trailing dividend yield of 4.14%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. 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
The ETF has lost about -11.05% so far this year and is down about -0.89% in the last one year (as of 03/27/2023). In the past 52-week period, it has traded between $57.66 and $81.27.
The ETF has a beta of 1.60 and standard deviation of 43.59% 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.
Alternatives
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 $7.40 billion in assets, Energy Select Sector SPDR ETF has $35.70 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.
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Is Invesco S&P 500 Equal Weight Energy ETF (RYE) a Strong ETF Right Now?
The Invesco S&P 500 Equal Weight Energy ETF made its debut on 11/01/2006, and is a smart beta exchange traded fund that provides broad exposure to the Energy 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 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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
Because the fund has amassed over $485.09 million, this makes it one of the average sized ETFs in the Energy ETFs. RYE is managed by Invesco. This particular fund seeks to match the performance of the S&P 500 Equal Weight Energy Index before fees and expenses.
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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Operating expenses on an annual basis are 0.40% for RYE, making it one of the cheaper products in the space.
The fund has a 12-month trailing dividend yield of 4.14%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. 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
The ETF has lost about -11.05% so far this year and is down about -0.89% in the last one year (as of 03/27/2023). In the past 52-week period, it has traded between $57.66 and $81.27.
The ETF has a beta of 1.60 and standard deviation of 43.59% 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.
Alternatives
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 $7.40 billion in assets, Energy Select Sector SPDR ETF has $35.70 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.