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 ALPS Equal Sector Weight ETF (EQL) a Strong ETF Right Now?
Read MoreHide Full Article
A smart beta exchange traded fund, the ALPS Equal Sector Weight ETF (EQL - Free Report) debuted on 07/07/2009, and offers broad exposure to the Style Box - Large Cap Blend 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.
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.
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
The fund is managed by Alps. EQL has been able to amass assets over $344.11 million, making it one of the average sized ETFs in the Style Box - Large Cap Blend. Before fees and expenses, this particular fund seeks to match the performance of the NYSE Select Sector Equal Weight Index.
The NYSE Equal Sector Weight Index comprises of all active Select Sector SPDR ETFs in an equal weighted portfolio. These sector includes Consumer Discretionary, Consumer Staples, Materials, Energy, Technology, Utilities, Financial, Industrial, Health Care & Real Estate.
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.
Operating expenses on an annual basis are 0.26% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.97%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
Looking at individual holdings, Technologyselectsectorspdrfund (XLK - Free Report) accounts for about 9.85% of total assets, followed by Realestateselectsectorspdrfund (XLRE - Free Report) and Financialselectsectorspdrfund (XLF - Free Report) .
Its top 10 holdings account for approximately 91.97% of EQL's total assets under management.
Performance and Risk
The ETF has lost about -0.27% so far this year and is up about 11.42% in the last one year (as of 01/15/2024). In the past 52-week period, it has traded between $94.86 and $110.26.
The fund has a beta of 0.96 and standard deviation of 15.72% for the trailing three-year period, which makes EQL a medium risk choice in this particular space. With about 12 holdings, it has more concentrated exposure than peers.
Alternatives
ALPS Equal Sector Weight ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core S&P 500 ETF (IVV - Free Report) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY - Free Report) tracks S&P 500 Index. IShares Core S&P 500 ETF has $403.29 billion in assets, SPDR S&P 500 ETF has $484.93 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Blend.
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 ALPS Equal Sector Weight ETF (EQL) a Strong ETF Right Now?
A smart beta exchange traded fund, the ALPS Equal Sector Weight ETF (EQL - Free Report) debuted on 07/07/2009, and offers broad exposure to the Style Box - Large Cap Blend 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.
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.
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
The fund is managed by Alps. EQL has been able to amass assets over $344.11 million, making it one of the average sized ETFs in the Style Box - Large Cap Blend. Before fees and expenses, this particular fund seeks to match the performance of the NYSE Select Sector Equal Weight Index.
The NYSE Equal Sector Weight Index comprises of all active Select Sector SPDR ETFs in an equal weighted portfolio. These sector includes Consumer Discretionary, Consumer Staples, Materials, Energy, Technology, Utilities, Financial, Industrial, Health Care & Real Estate.
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.
Operating expenses on an annual basis are 0.26% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.97%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
Looking at individual holdings, Technologyselectsectorspdrfund (XLK - Free Report) accounts for about 9.85% of total assets, followed by Realestateselectsectorspdrfund (XLRE - Free Report) and Financialselectsectorspdrfund (XLF - Free Report) .
Its top 10 holdings account for approximately 91.97% of EQL's total assets under management.
Performance and Risk
The ETF has lost about -0.27% so far this year and is up about 11.42% in the last one year (as of 01/15/2024). In the past 52-week period, it has traded between $94.86 and $110.26.
The fund has a beta of 0.96 and standard deviation of 15.72% for the trailing three-year period, which makes EQL a medium risk choice in this particular space. With about 12 holdings, it has more concentrated exposure than peers.
Alternatives
ALPS Equal Sector Weight ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Core S&P 500 ETF (IVV - Free Report) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY - Free Report) tracks S&P 500 Index. IShares Core S&P 500 ETF has $403.29 billion in assets, SPDR S&P 500 ETF has $484.93 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Blend.
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.