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

Launched on 11/01/2006, the Invesco S&P 500 Equal Weight Technology ETF (RYT) is a smart beta exchange traded fund offering broad exposure to the Technology ETFs category of the market.

What Are Smart Beta ETFs?

Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.

Market cap weighted indexes work great for investors who believe in market efficiency. They provide 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.

Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.

The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.

Fund Sponsor & Index

The fund is managed by Invesco, and has been able to amass over $1.85 billion, which makes it one of the larger ETFs in the Technology ETFs. RYT, before fees and expenses, seeks to match the performance of the S&P 500 Equal Weight Information Technology Index.

The S&P 500 Equal Weight Information Technology Index equally weights stocks in the information technology sector of the S&P 500 Index.

Cost & Other Expenses

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

Operating expenses on an annual basis are 0.40% for this ETF, which makes it one of the least expensive products in the space.

RYT's 12-month trailing dividend yield is 0.71%.

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.

This ETF has heaviest allocation in the Information Technology sector - about 100% of the portfolio.

Looking at individual holdings, Epam Systems Inc (EPAM) accounts for about 1.74% of total assets, followed by Enphase Energy Inc (ENPH) and Arista Networks Inc (ANET).

Its top 10 holdings account for approximately 15.54% of RYT's total assets under management.

Performance and Risk

The ETF has lost about -27.67% so far this year and is down about -19.13% in the last one year (as of 09/29/2022). In the past 52-week period, it has traded between $229.52 and $327.55.

RYT has a beta of 1.16 and standard deviation of 29.50% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 77 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco S&P 500 Equal Weight Technology ETF is an excellent option for investors seeking to outperform the Technology ETFs segment of the market. There are other ETFs in the space which investors could consider as well.

Technology Select Sector SPDR ETF (XLK) tracks Technology Select Sector Index and the Vanguard Information Technology ETF (VGT) tracks MSCI US Investable Market Information Technology 25/50 Index. Technology Select Sector SPDR ETF has $37.41 billion in assets, Vanguard Information Technology ETF has $41.16 billion. XLK has an expense ratio of 0.10% and VGT charges 0.10%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Technology 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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Invesco S&P 500 Equal Weight Technology ETF (RYT): ETF Research Reports
 
EPAM Systems, Inc. (EPAM): Free Stock Analysis Report
 
Enphase Energy, Inc. (ENPH): Free Stock Analysis Report
 
Technology Select Sector SPDR ETF (XLK): ETF Research Reports
 
Arista Networks, Inc. (ANET): Free Stock Analysis Report
 
Vanguard Information Technology ETF (VGT): ETF Research Reports
 
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