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Is ALPS Equal Sector Weight ETF (EQL) a Strong ETF Right Now?
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Making its debut on 07/07/2009, smart beta exchange traded fund ALPS Equal Sector Weight ETF (EQL - Free Report) provides investors 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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
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.
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
The fund is managed by Alps. EQL has been able to amass assets over $331.55 million, making it one of the average sized ETFs in the Style Box - Large Cap Blend. This particular fund seeks to match the performance of the NYSE Select Sector Equal Weight Index before fees and expenses.
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
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 EQL are 0.26%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.87%.
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.
When you look at individual holdings, Technologyselectsectorspdrfund (XLK - Free Report) accounts for about 9.85% of the fund's total assets, followed by Realestateselectsectorspdrfund (XLRE - Free Report) and Financialselectsectorspdrfund (XLF - Free Report) .
EQL's top 10 holdings account for about 91.97% of its total assets under management.
Performance and Risk
The ETF return is roughly 5.10% and is up about 23.37% so far this year and in the past one year (as of 03/18/2024), respectively. EQL has traded between $94.92 and $115.85 during this last 52-week period.
The ETF has a beta of 0.96 and standard deviation of 15.46% for the trailing three-year period, making it a medium risk choice in the 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 $451.83 billion in assets, SPDR S&P 500 ETF has $497.84 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.
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Is ALPS Equal Sector Weight ETF (EQL) a Strong ETF Right Now?
Making its debut on 07/07/2009, smart beta exchange traded fund ALPS Equal Sector Weight ETF (EQL - Free Report) provides investors 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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
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.
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
The fund is managed by Alps. EQL has been able to amass assets over $331.55 million, making it one of the average sized ETFs in the Style Box - Large Cap Blend. This particular fund seeks to match the performance of the NYSE Select Sector Equal Weight Index before fees and expenses.
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
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 EQL are 0.26%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.87%.
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.
When you look at individual holdings, Technologyselectsectorspdrfund (XLK - Free Report) accounts for about 9.85% of the fund's total assets, followed by Realestateselectsectorspdrfund (XLRE - Free Report) and Financialselectsectorspdrfund (XLF - Free Report) .
EQL's top 10 holdings account for about 91.97% of its total assets under management.
Performance and Risk
The ETF return is roughly 5.10% and is up about 23.37% so far this year and in the past one year (as of 03/18/2024), respectively. EQL has traded between $94.92 and $115.85 during this last 52-week period.
The ETF has a beta of 0.96 and standard deviation of 15.46% for the trailing three-year period, making it a medium risk choice in the 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 $451.83 billion in assets, SPDR S&P 500 ETF has $497.84 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.