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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?
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.
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.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: 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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $305.37 million, this makes it one of the average sized ETFs in the Style Box - Large Cap Blend. EQL is managed by Alps. EQL, before fees and expenses, 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
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.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.26%.
The fund has a 12-month trailing dividend yield of 2.13%.
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.
Looking at individual holdings, Communication Services Select Sector Spdr Fund (XLC - Free Report) accounts for about 9.35% of total assets, followed by Energy Select Sector Spdr Fund (XLE - Free Report) and Financial Select Sector Spdr Fund (XLF - Free Report) .
EQL's top 10 holdings account for about 91.26% of its total assets under management.
Performance and Risk
So far this year, EQL has gained about 10.28%, and is up roughly 8.06% in the last one year (as of 09/08/2023). During this past 52-week period, the fund has traded between $88.15 and $107.63.
The fund has a beta of 0.96 and standard deviation of 16.37% for the trailing three-year period, which makes EQL a medium risk choice in this particular 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 $348.62 billion in assets, SPDR S&P 500 ETF has $409.08 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?
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.
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.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: 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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $305.37 million, this makes it one of the average sized ETFs in the Style Box - Large Cap Blend. EQL is managed by Alps. EQL, before fees and expenses, 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
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.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.26%.
The fund has a 12-month trailing dividend yield of 2.13%.
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.
Looking at individual holdings, Communication Services Select Sector Spdr Fund (XLC - Free Report) accounts for about 9.35% of total assets, followed by Energy Select Sector Spdr Fund (XLE - Free Report) and Financial Select Sector Spdr Fund (XLF - Free Report) .
EQL's top 10 holdings account for about 91.26% of its total assets under management.
Performance and Risk
So far this year, EQL has gained about 10.28%, and is up roughly 8.06% in the last one year (as of 09/08/2023). During this past 52-week period, the fund has traded between $88.15 and $107.63.
The fund has a beta of 0.96 and standard deviation of 16.37% for the trailing three-year period, which makes EQL a medium risk choice in this particular 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 $348.62 billion in assets, SPDR S&P 500 ETF has $409.08 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.