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Is Invesco S&P 500 Equal Weight Financials ETF (RYF) a Strong ETF Right Now?
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Designed to provide broad exposure to the Financials ETFs category of the market, the Invesco S&P 500 Equal Weight Financials ETF is a smart beta exchange traded fund launched on 11/01/2006.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by Invesco. RYF has been able to amass assets over $289.58 million, making it one of the average sized ETFs in the Financials ETFs. Before fees and expenses, RYF seeks to match the performance of the S&P 500 Equal Weight Financials Index.
The S&P 500 Equal Weight Financials Index equally weights stocks in the financial sector of the S&P 500 Index.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.40%, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 2.32%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
RYF's heaviest allocation is in the Financials sector, which is about 100% of the portfolio.
When you look at individual holdings, Cboe Global Markets Inc (CBOE - Free Report) accounts for about 1.60% of the fund's total assets, followed by Marketaxess Holdings Inc (MKTX - Free Report) and Intercontinental Exchange Inc (ICE - Free Report) .
Its top 10 holdings account for approximately 15.38% of RYF's total assets under management.
Performance and Risk
The ETF has lost about -11.53% and is down about -7.59% so far this year and in the past one year (as of 05/22/2023), respectively. RYF has traded between $47.84 and $62.20 during this last 52-week period.
The fund has a beta of 1.07 and standard deviation of 25.25% for the trailing three-year period, which makes RYF a medium risk choice in this particular space. With about 74 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco S&P 500 Equal Weight Financials ETF is a reasonable option for investors seeking to outperform the Financials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Financials ETF (VFH - Free Report) tracks MSCI US Investable Market Financials 25/50 Index and the Financial Select Sector SPDR ETF (XLF - Free Report) tracks Financial Select Sector Index. Vanguard Financials ETF has $7.64 billion in assets, Financial Select Sector SPDR ETF has $29.30 billion. VFH has an expense ratio of 0.10% and XLF 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 Financials 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 Financials ETF (RYF) a Strong ETF Right Now?
Designed to provide broad exposure to the Financials ETFs category of the market, the Invesco S&P 500 Equal Weight Financials ETF is a smart beta exchange traded fund launched on 11/01/2006.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by Invesco. RYF has been able to amass assets over $289.58 million, making it one of the average sized ETFs in the Financials ETFs. Before fees and expenses, RYF seeks to match the performance of the S&P 500 Equal Weight Financials Index.
The S&P 500 Equal Weight Financials Index equally weights stocks in the financial sector of the S&P 500 Index.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.40%, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 2.32%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
RYF's heaviest allocation is in the Financials sector, which is about 100% of the portfolio.
When you look at individual holdings, Cboe Global Markets Inc (CBOE - Free Report) accounts for about 1.60% of the fund's total assets, followed by Marketaxess Holdings Inc (MKTX - Free Report) and Intercontinental Exchange Inc (ICE - Free Report) .
Its top 10 holdings account for approximately 15.38% of RYF's total assets under management.
Performance and Risk
The ETF has lost about -11.53% and is down about -7.59% so far this year and in the past one year (as of 05/22/2023), respectively. RYF has traded between $47.84 and $62.20 during this last 52-week period.
The fund has a beta of 1.07 and standard deviation of 25.25% for the trailing three-year period, which makes RYF a medium risk choice in this particular space. With about 74 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco S&P 500 Equal Weight Financials ETF is a reasonable option for investors seeking to outperform the Financials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Financials ETF (VFH - Free Report) tracks MSCI US Investable Market Financials 25/50 Index and the Financial Select Sector SPDR ETF (XLF - Free Report) tracks Financial Select Sector Index. Vanguard Financials ETF has $7.64 billion in assets, Financial Select Sector SPDR ETF has $29.30 billion. VFH has an expense ratio of 0.10% and XLF 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 Financials 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.