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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?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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
Managed by Invesco, RSPM has amassed assets over $294.88 million, making it one of the average sized ETFs in the Materials ETFs. Before fees and expenses, this particular fund 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.40% for RSPM, making it one of the cheaper products in the space.
RSPM's 12-month trailing dividend yield is 1.89%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
For RSPM, it has heaviest allocation in the Materials sector --about 100% of the portfolio.
Taking into account individual holdings, Freeport-Mcmoran Inc (FCX - Free Report) accounts for about 4.16% of the fund's total assets, followed by Steel Dynamics Inc (STLD - Free Report) and Eastman Chemical Co (EMN - Free Report) .
RSPM's top 10 holdings account for about 37.63% of its total assets under management.
Performance and Risk
The ETF return is roughly 8.85% and it's up approximately 20.28% so far this year and in the past one year (as of 05/20/2024), respectively. RSPM has traded between $28.92 and $36.45 during this last 52-week period.
The ETF has a beta of 1.14 and standard deviation of 20.18% for the trailing three-year period. With about 29 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 $5.64 billion in assets, FlexShares Morningstar Global Upstream Natural Resources ETF has $6.67 billion. XLB has an expense ratio of 0.09% 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?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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
Managed by Invesco, RSPM has amassed assets over $294.88 million, making it one of the average sized ETFs in the Materials ETFs. Before fees and expenses, this particular fund 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.40% for RSPM, making it one of the cheaper products in the space.
RSPM's 12-month trailing dividend yield is 1.89%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
For RSPM, it has heaviest allocation in the Materials sector --about 100% of the portfolio.
Taking into account individual holdings, Freeport-Mcmoran Inc (FCX - Free Report) accounts for about 4.16% of the fund's total assets, followed by Steel Dynamics Inc (STLD - Free Report) and Eastman Chemical Co (EMN - Free Report) .
RSPM's top 10 holdings account for about 37.63% of its total assets under management.
Performance and Risk
The ETF return is roughly 8.85% and it's up approximately 20.28% so far this year and in the past one year (as of 05/20/2024), respectively. RSPM has traded between $28.92 and $36.45 during this last 52-week period.
The ETF has a beta of 1.14 and standard deviation of 20.18% for the trailing three-year period. With about 29 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 $5.64 billion in assets, FlexShares Morningstar Global Upstream Natural Resources ETF has $6.67 billion. XLB has an expense ratio of 0.09% 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.