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Should Invesco Russell 1000 Equal Weight ETF (EQAL) Be on Your Investing Radar?

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The Invesco Russell 1000 Equal Weight ETF (EQAL - Free Report) was launched on 12/23/2014, and is a passively managed exchange traded fund designed to offer broad exposure to the Large Cap Blend segment of the US equity market.

The fund is sponsored by Invesco. It has amassed assets over $608.65 million, making it one of the average sized ETFs attempting to match the Large Cap Blend segment of the US equity market.

Why Large Cap Blend

Companies that fall in the large cap category tend to have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.

Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.

Costs

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.

Annual operating expenses for this ETF are 0.20%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.77%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Information Technology sector--about 13.10% of the portfolio. Industrials and Financials round out the top three.

Looking at individual holdings, Verizon Communications Inc (VZ - Free Report) accounts for about 0.57% of total assets, followed by Motorola Solutions Inc (MSI - Free Report) and At&t Inc (T - Free Report) .

The top 10 holdings account for about 5.37% of total assets under management.

Performance and Risk

EQAL seeks to match the performance of the Russell 1000 Equal Weight Index before fees and expenses. The Russell 1000 Equal Weight Index is composed of securities in the Russell 1000 Index and is equally weighted across nine sector groups with each security within the sector receiving equal weight.

The ETF has added about 4.98% so far this year and it's up approximately 19.44% in the last one year (as of 05/17/2024). In the past 52-week period, it has traded between $37.43 and $46.19.

The ETF has a beta of 1.11 and standard deviation of 18.12% for the trailing three-year period, making it a medium risk choice in the space. With about 994 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco Russell 1000 Equal Weight ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, EQAL is a sufficient option for those seeking exposure to the Style Box - Large Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.

The iShares Core S&P 500 ETF (IVV - Free Report) and the SPDR S&P 500 ETF (SPY - Free Report) track a similar index. While iShares Core S&P 500 ETF has $461.70 billion in assets, SPDR S&P 500 ETF has $522.38 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.

Bottom-Line

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

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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