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Is Invesco S&P 500 Equal Weight ETF (RSP) a Strong ETF Right Now?

Designed to provide broad exposure to the Style Box - Large Cap Blend category of the market, the Invesco S&P 500 Equal Weight ETF (RSP) is a smart beta exchange traded fund launched on 04/24/2003.

What Are Smart Beta ETFs?

Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.

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.

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.

Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.

Fund Sponsor & Index

The fund is managed by Invesco, and has been able to amass over $32.24 billion, which makes it one of the largest ETFs in the Style Box - Large Cap Blend. RSP, before fees and expenses, seeks to match the performance of the S&P 500 Equal Weight Index.

The S&P 500 Equal Weight Index equally weights the stocks in the S&P 500 Index.

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.

Annual operating expenses for this ETF are 0.20%, making it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 1.31%.

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.

This ETF has heaviest allocation in the Information Technology sector - about 15.20% of the portfolio. Industrials and Financials round out the top three.

Taking into account individual holdings, Tesla Inc (TSLA) accounts for about 0.30% of the fund's total assets, followed by Enphase Energy Inc (ENPH) and Marathon Oil Corp (MRO).

The top 10 holdings account for about 2.74% of total assets under management.

Performance and Risk

The ETF has lost about -2.38% so far this year and is up about 22.76% in the last one year (as of 01/19/2022). In the past 52-week period, it has traded between $126.50 and $164.20.

The fund has a beta of 1.10 and standard deviation of 24.22% for the trailing three-year period. With about 507 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco S&P 500 Equal 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) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY) tracks S&P 500 Index. IShares Core S&P 500 ETF has $321.71 billion in assets, SPDR S&P 500 ETF has $435.71 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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Invesco S&P 500 Equal Weight ETF (RSP): ETF Research Reports
 
Marathon Oil Corporation (MRO): Free Stock Analysis Report
 
Tesla, Inc. (TSLA): Free Stock Analysis Report
 
SPDR S&P 500 ETF (SPY): ETF Research Reports
 
Enphase Energy, Inc. (ENPH): Free Stock Analysis Report
 
iShares Core S&P 500 ETF (IVV): ETF Research Reports
 
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