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Is ALPS Equal Sector Weight ETF (EQL) a Strong ETF Right Now?
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A smart beta exchange traded fund, the ALPS Equal Sector Weight ETF (EQL - Free Report) debuted on 07/07/2009, and offers broad exposure to the Style Box - Large Cap Blend 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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
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 sponsored by Alps. It has amassed assets over $234.84 million, making it one of the average sized ETFs in the Style Box - Large Cap Blend. Before fees and expenses, EQL seeks to match the performance of the NYSE Select Sector Equal Weight Index.
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
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.
Annual operating expenses for this ETF are 0.27%, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.75%.
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.
Looking at individual holdings, Energy Select Sector Spdr Fund (XLE - Free Report) accounts for about 12.78% of total assets, followed by Utilities Select Sector Spdr Fund (XLU - Free Report) and Consumer Staples Select Sector Spdr Fund (XLP - Free Report) .
Its top 10 holdings account for approximately 91.99% of EQL's total assets under management.
Performance and Risk
So far this year, EQL has lost about -1.12%, and is up about 12.59% in the last one year (as of 04/22/2022). During this past 52-week period, the fund has traded between $96.96 and $110.50.
EQL has a beta of 0.96 and standard deviation of 21.97% for the trailing three-year period, which makes the fund 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 $313.81 billion in assets, SPDR S&P 500 ETF has $394.68 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?
A smart beta exchange traded fund, the ALPS Equal Sector Weight ETF (EQL - Free Report) debuted on 07/07/2009, and offers broad exposure to the Style Box - Large Cap Blend 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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
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 sponsored by Alps. It has amassed assets over $234.84 million, making it one of the average sized ETFs in the Style Box - Large Cap Blend. Before fees and expenses, EQL seeks to match the performance of the NYSE Select Sector Equal Weight Index.
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
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.
Annual operating expenses for this ETF are 0.27%, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 1.75%.
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.
Looking at individual holdings, Energy Select Sector Spdr Fund (XLE - Free Report) accounts for about 12.78% of total assets, followed by Utilities Select Sector Spdr Fund (XLU - Free Report) and Consumer Staples Select Sector Spdr Fund (XLP - Free Report) .
Its top 10 holdings account for approximately 91.99% of EQL's total assets under management.
Performance and Risk
So far this year, EQL has lost about -1.12%, and is up about 12.59% in the last one year (as of 04/22/2022). During this past 52-week period, the fund has traded between $96.96 and $110.50.
EQL has a beta of 0.96 and standard deviation of 21.97% for the trailing three-year period, which makes the fund 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 $313.81 billion in assets, SPDR S&P 500 ETF has $394.68 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.