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Is Invesco S&P 500 Equal Weight Utilities ETF (RSPU) a Strong ETF Right Now?
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A smart beta exchange traded fund, the Invesco S&P 500 Equal Weight Utilities ETF (RSPU - Free Report) debuted on 11/01/2006, and offers broad exposure to the Utilities/Infrastructure 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.
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.
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.
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. RSPU has been able to amass assets over $321.88 million, making it one of the average sized ETFs in the Utilities/Infrastructure ETFs. RSPU, before fees and expenses, seeks to match the performance of the SP 500 EQUAL WEIGHT TELECM-UTILITY INDEX.
The S&P 500 Equal Weight Telecommunication Services & Utilities Index equally weights stocks found in the utilities and telecommunication services sectors of the S&P 500 Index.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Operating expenses on an annual basis are 0.40% for RSPU, making it one of the cheaper products in the space.
RSPU's 12-month trailing dividend yield is 2.55%.
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.
Representing 100% of the portfolio, the fund has heaviest allocation to the Utilities sector.
When you look at individual holdings, Constellation Energy Corp (CEG - Free Report) accounts for about 3.90% of the fund's total assets, followed by Nrg Energy Inc (NRG - Free Report) and Edison International (EIX - Free Report) .
The top 10 holdings account for about 35.04% of total assets under management.
Performance and Risk
Year-to-date, the Invesco S&P 500 Equal Weight Utilities ETF has lost about -5.54% so far, and is down about -10.21% over the last 12 months (as of 09/14/2023). RSPU has traded between $50.72 and $61.25 in this past 52-week period.
The ETF has a beta of 0.56 and standard deviation of 17.70% for the trailing three-year period. With about 32 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco S&P 500 Equal Weight Utilities ETF is not a suitable option for investors seeking to outperform the Utilities/Infrastructure ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
Vanguard Utilities ETF (VPU - Free Report) tracks MSCI US Investable Market Utilities 25/50 Index and the Utilities Select Sector SPDR ETF (XLU - Free Report) tracks Utilities Select Sector Index. Vanguard Utilities ETF has $5.17 billion in assets, Utilities Select Sector SPDR ETF has $14.99 billion. VPU has an expense ratio of 0.10% and XLU 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 Utilities/Infrastructure 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 Utilities ETF (RSPU) a Strong ETF Right Now?
A smart beta exchange traded fund, the Invesco S&P 500 Equal Weight Utilities ETF (RSPU - Free Report) debuted on 11/01/2006, and offers broad exposure to the Utilities/Infrastructure 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.
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.
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.
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. RSPU has been able to amass assets over $321.88 million, making it one of the average sized ETFs in the Utilities/Infrastructure ETFs. RSPU, before fees and expenses, seeks to match the performance of the SP 500 EQUAL WEIGHT TELECM-UTILITY INDEX.
The S&P 500 Equal Weight Telecommunication Services & Utilities Index equally weights stocks found in the utilities and telecommunication services sectors of the S&P 500 Index.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Operating expenses on an annual basis are 0.40% for RSPU, making it one of the cheaper products in the space.
RSPU's 12-month trailing dividend yield is 2.55%.
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.
Representing 100% of the portfolio, the fund has heaviest allocation to the Utilities sector.
When you look at individual holdings, Constellation Energy Corp (CEG - Free Report) accounts for about 3.90% of the fund's total assets, followed by Nrg Energy Inc (NRG - Free Report) and Edison International (EIX - Free Report) .
The top 10 holdings account for about 35.04% of total assets under management.
Performance and Risk
Year-to-date, the Invesco S&P 500 Equal Weight Utilities ETF has lost about -5.54% so far, and is down about -10.21% over the last 12 months (as of 09/14/2023). RSPU has traded between $50.72 and $61.25 in this past 52-week period.
The ETF has a beta of 0.56 and standard deviation of 17.70% for the trailing three-year period. With about 32 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco S&P 500 Equal Weight Utilities ETF is not a suitable option for investors seeking to outperform the Utilities/Infrastructure ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
Vanguard Utilities ETF (VPU - Free Report) tracks MSCI US Investable Market Utilities 25/50 Index and the Utilities Select Sector SPDR ETF (XLU - Free Report) tracks Utilities Select Sector Index. Vanguard Utilities ETF has $5.17 billion in assets, Utilities Select Sector SPDR ETF has $14.99 billion. VPU has an expense ratio of 0.10% and XLU 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 Utilities/Infrastructure 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.