We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is Invesco S&P 500 Equal Weight Energy ETF (RYE) a Strong ETF Right Now?
Read MoreHide Full Article
Launched on 11/01/2006, the Invesco S&P 500 Equal Weight Energy ETF is a smart beta exchange traded fund offering broad exposure to the Energy ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
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.
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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
RYE is managed by Invesco, and this fund has amassed over $472.96 million, which makes it one of the average sized ETFs in the Energy ETFs. Before fees and expenses, RYE seeks to match the performance of the S&P 500 Equal Weight Energy Index.
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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins 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.
The fund has a 12-month trailing dividend yield of 4.18%.
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 Energy sector - about 100% of the portfolio.
When you look at individual holdings, Hess Corp (HES - Free Report) accounts for about 4.58% of the fund's total assets, followed by Marathon Oil Corp (MRO - Free Report) and Apa Corp (APA - Free Report) .
RYE's top 10 holdings account for about 44.69% of its total assets under management.
Performance and Risk
Year-to-date, the Invesco S&P 500 Equal Weight Energy ETF has lost about -11.98% so far, and is down about -13.81% over the last 12 months (as of 06/01/2023). RYE has traded between $57.66 and $81.27 in this past 52-week period.
RYE has a beta of 1.61 and standard deviation of 39.38% for the trailing three-year period, which makes the fund 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 $7.11 billion in assets, Energy Select Sector SPDR ETF has $33.51 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.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Is Invesco S&P 500 Equal Weight Energy ETF (RYE) a Strong ETF Right Now?
Launched on 11/01/2006, the Invesco S&P 500 Equal Weight Energy ETF is a smart beta exchange traded fund offering broad exposure to the Energy ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
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.
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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
RYE is managed by Invesco, and this fund has amassed over $472.96 million, which makes it one of the average sized ETFs in the Energy ETFs. Before fees and expenses, RYE seeks to match the performance of the S&P 500 Equal Weight Energy Index.
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
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins 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.
The fund has a 12-month trailing dividend yield of 4.18%.
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 Energy sector - about 100% of the portfolio.
When you look at individual holdings, Hess Corp (HES - Free Report) accounts for about 4.58% of the fund's total assets, followed by Marathon Oil Corp (MRO - Free Report) and Apa Corp (APA - Free Report) .
RYE's top 10 holdings account for about 44.69% of its total assets under management.
Performance and Risk
Year-to-date, the Invesco S&P 500 Equal Weight Energy ETF has lost about -11.98% so far, and is down about -13.81% over the last 12 months (as of 06/01/2023). RYE has traded between $57.66 and $81.27 in this past 52-week period.
RYE has a beta of 1.61 and standard deviation of 39.38% for the trailing three-year period, which makes the fund 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 $7.11 billion in assets, Energy Select Sector SPDR ETF has $33.51 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.