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Is Invesco S&P 500 Equal Weight Materials ETF (RTM) a Strong ETF Right Now?
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The Invesco S&P 500 Equal Weight Materials ETF was launched on 11/01/2006, and is a smart beta exchange traded fund designed to offer broad exposure to the Materials 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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
RTM is managed by Invesco, and this fund has amassed over $343.70 million, which makes it one of the average sized ETFs in the Materials ETFs. RTM, before fees and expenses, seeks to match the performance of the S&P 500 Equal Weight Materials Index.
The S&P 500 Equal Weight Materials Index equally weights stocks in the materials sector 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.
Annual operating expenses for RTM are 0.40%, which makes it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 2.25%.
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.
This ETF has heaviest allocation in the Materials sector - about 100% of the portfolio.
Taking into account 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) .
The top 10 holdings account for about 36.56% of total assets under management.
Performance and Risk
Year-to-date, the Invesco S&P 500 Equal Weight Materials ETF has gained about 0.84% so far, and is down about -13.25% over the last 12 months (as of 03/30/2023). RTM has traded between $141.04 and $190.46 in this past 52-week period.
The fund has a beta of 1.11 and standard deviation of 25.18% for the trailing three-year period, which makes RTM a medium risk choice in this particular 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 $5.32 billion in assets, FlexShares Morningstar Global Upstream Natural Resources ETF has $7.28 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?
The Invesco S&P 500 Equal Weight Materials ETF was launched on 11/01/2006, and is a smart beta exchange traded fund designed to offer broad exposure to the Materials 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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
RTM is managed by Invesco, and this fund has amassed over $343.70 million, which makes it one of the average sized ETFs in the Materials ETFs. RTM, before fees and expenses, seeks to match the performance of the S&P 500 Equal Weight Materials Index.
The S&P 500 Equal Weight Materials Index equally weights stocks in the materials sector 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.
Annual operating expenses for RTM are 0.40%, which makes it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 2.25%.
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.
This ETF has heaviest allocation in the Materials sector - about 100% of the portfolio.
Taking into account 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) .
The top 10 holdings account for about 36.56% of total assets under management.
Performance and Risk
Year-to-date, the Invesco S&P 500 Equal Weight Materials ETF has gained about 0.84% so far, and is down about -13.25% over the last 12 months (as of 03/30/2023). RTM has traded between $141.04 and $190.46 in this past 52-week period.
The fund has a beta of 1.11 and standard deviation of 25.18% for the trailing three-year period, which makes RTM a medium risk choice in this particular 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 $5.32 billion in assets, FlexShares Morningstar Global Upstream Natural Resources ETF has $7.28 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.