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Is Invesco S&P 500 Equal Weight Materials ETF (RSPM) a Strong ETF Right Now?
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The Invesco S&P 500 Equal Weight Materials ETF (RSPM - Free Report) 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?
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.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Managed by Invesco, RSPM has amassed assets over $277.90 million, making it one of the average sized ETFs in the Materials ETFs. This particular fund, 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
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.
Annual operating expenses for this ETF are 0.40%, making it one of the cheaper products in the space.
RSPM's 12-month trailing dividend yield is 2.28%.
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 Materials sector.
Looking at individual holdings, Steel Dynamics Inc (STLD - Free Report) accounts for about 3.80% of total assets, followed by Westrock Co (WRK - Free Report) and Packaging Corp Of America (PKG - Free Report) .
RSPM's top 10 holdings account for about 36.62% of its total assets under management.
Performance and Risk
Year-to-date, the Invesco S&P 500 Equal Weight Materials ETF has lost about -0.11% so far, and is down about -4.31% over the last 12 months (as of 11/16/2023). RSPM has traded between $28.92 and $35.46 in this past 52-week period.
The ETF has a beta of 1.12 and standard deviation of 21.27% for the trailing three-year period. With about 30 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 $7.20 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 (RSPM) a Strong ETF Right Now?
The Invesco S&P 500 Equal Weight Materials ETF (RSPM - Free Report) 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?
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.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
Managed by Invesco, RSPM has amassed assets over $277.90 million, making it one of the average sized ETFs in the Materials ETFs. This particular fund, 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
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.
Annual operating expenses for this ETF are 0.40%, making it one of the cheaper products in the space.
RSPM's 12-month trailing dividend yield is 2.28%.
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 Materials sector.
Looking at individual holdings, Steel Dynamics Inc (STLD - Free Report) accounts for about 3.80% of total assets, followed by Westrock Co (WRK - Free Report) and Packaging Corp Of America (PKG - Free Report) .
RSPM's top 10 holdings account for about 36.62% of its total assets under management.
Performance and Risk
Year-to-date, the Invesco S&P 500 Equal Weight Materials ETF has lost about -0.11% so far, and is down about -4.31% over the last 12 months (as of 11/16/2023). RSPM has traded between $28.92 and $35.46 in this past 52-week period.
The ETF has a beta of 1.12 and standard deviation of 21.27% for the trailing three-year period. With about 30 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 $7.20 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.