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Is Invesco S&P 500 Equal Weight Consumer Discretionary ETF (RCD) a Strong ETF Right Now?
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Launched on 11/01/2006, the Invesco S&P 500 Equal Weight Consumer Discretionary ETF is a smart beta exchange traded fund offering broad exposure to the Consumer Discretionary ETFs category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
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.
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
The fund is managed by Invesco, and has been able to amass over $489.03 million, which makes it one of the larger ETFs in the Consumer Discretionary ETFs. This particular fund, before fees and expenses, seeks to match the performance of the S&P 500 Equal Weight Consumer Discretionary Index.
The S&P 500 Equal Weight Consumer Discretionary Index equally weights stocks in the consumer discretionary sector of the S&P 500 Index.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for this ETF are 0.40%, making it one of the cheaper products in the space.
It's 12-month trailing dividend yield comes in at 1.02%.
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.
Representing 100% of the portfolio, the fund has heaviest allocation to the Consumer Discretionary sector.
When you look at individual holdings, Amazon.com Inc (AMZN - Free Report) accounts for about 2.05% of the fund's total assets, followed by Tesla Inc (TSLA - Free Report) and Chipotle Mexican Grill Inc (CMG - Free Report) .
Its top 10 holdings account for approximately 19.9% of RCD's total assets under management.
Performance and Risk
Year-to-date, the Invesco S&P 500 Equal Weight Consumer Discretionary ETF has gained about 10.78% so far, and was up about 14.55% over the last 12 months (as of 05/19/2023). RCD has traded between $104.82 and $137.86 in this past 52-week period.
RCD has a beta of 1.32 and standard deviation of 25.57% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 55 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco S&P 500 Equal Weight Consumer Discretionary ETF is a reasonable option for investors seeking to outperform the Consumer Discretionary ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Consumer Discretionary ETF (VCR - Free Report) tracks MSCI US Investable Market Consumer Discretionary 25/50 Index and the Consumer Discretionary Select Sector SPDR ETF (XLY - Free Report) tracks Consumer Discretionary Select Sector Index. Vanguard Consumer Discretionary ETF has $4.27 billion in assets, Consumer Discretionary Select Sector SPDR ETF has $14.92 billion. VCR has an expense ratio of 0.10% and XLY 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 Consumer Discretionary 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 Consumer Discretionary ETF (RCD) a Strong ETF Right Now?
Launched on 11/01/2006, the Invesco S&P 500 Equal Weight Consumer Discretionary ETF is a smart beta exchange traded fund offering broad exposure to the Consumer Discretionary ETFs category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
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.
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
The fund is managed by Invesco, and has been able to amass over $489.03 million, which makes it one of the larger ETFs in the Consumer Discretionary ETFs. This particular fund, before fees and expenses, seeks to match the performance of the S&P 500 Equal Weight Consumer Discretionary Index.
The S&P 500 Equal Weight Consumer Discretionary Index equally weights stocks in the consumer discretionary sector of the S&P 500 Index.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for this ETF are 0.40%, making it one of the cheaper products in the space.
It's 12-month trailing dividend yield comes in at 1.02%.
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.
Representing 100% of the portfolio, the fund has heaviest allocation to the Consumer Discretionary sector.
When you look at individual holdings, Amazon.com Inc (AMZN - Free Report) accounts for about 2.05% of the fund's total assets, followed by Tesla Inc (TSLA - Free Report) and Chipotle Mexican Grill Inc (CMG - Free Report) .
Its top 10 holdings account for approximately 19.9% of RCD's total assets under management.
Performance and Risk
Year-to-date, the Invesco S&P 500 Equal Weight Consumer Discretionary ETF has gained about 10.78% so far, and was up about 14.55% over the last 12 months (as of 05/19/2023). RCD has traded between $104.82 and $137.86 in this past 52-week period.
RCD has a beta of 1.32 and standard deviation of 25.57% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 55 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco S&P 500 Equal Weight Consumer Discretionary ETF is a reasonable option for investors seeking to outperform the Consumer Discretionary ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Consumer Discretionary ETF (VCR - Free Report) tracks MSCI US Investable Market Consumer Discretionary 25/50 Index and the Consumer Discretionary Select Sector SPDR ETF (XLY - Free Report) tracks Consumer Discretionary Select Sector Index. Vanguard Consumer Discretionary ETF has $4.27 billion in assets, Consumer Discretionary Select Sector SPDR ETF has $14.92 billion. VCR has an expense ratio of 0.10% and XLY 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 Consumer Discretionary 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.