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Is Invesco S&P 500 Quality ETF (SPHQ) a Strong ETF Right Now?
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A smart beta exchange traded fund, the Invesco S&P 500 Quality ETF (SPHQ - Free Report) debuted on 12/06/2005, and offers broad exposure to the Style Box - Large Cap Blend category of the market.
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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
SPHQ is managed by Invesco, and this fund has amassed over $10.80 billion, which makes it one of the largest ETFs in the Style Box - Large Cap Blend. Before fees and expenses, SPHQ seeks to match the performance of the S&P 500 Quality Index.
The S&P 500 Quality Index tracks the performance of stocks in the S&P 500 Index that have the highest quality score, which is calculated based on three fundamental measures, return on equity, accruals ratio and financial leverage ratio.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for SPHQ are 0.15%, which makes it one of the cheaper products in the space.
It's 12-month trailing dividend yield comes in at 1.17%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 33.70% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Consumer Staples and Industrials round out the top three.
When you look at individual holdings, Johnson & Johnson (JNJ - Free Report) accounts for about 5.69% of the fund's total assets, followed by Mastercard Inc (MA - Free Report) and Apple Inc (AAPL - Free Report) .
Its top 10 holdings account for approximately 45.07% of SPHQ's total assets under management.
Performance and Risk
The ETF has gained about 21.86% so far this year and is up roughly 26.13% in the last one year (as of 09/04/2024). In the past 52-week period, it has traded between $47.93 and $66.64.
The ETF has a beta of 0.92 and standard deviation of 17.28% for the trailing three-year period, making it a medium risk choice in the space. With about 102 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco S&P 500 Quality 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 Dividend Growth ETF (DGRO - Free Report) tracks Morningstar US Dividend Growth Index and the Vanguard Dividend Appreciation ETF (VIG - Free Report) tracks NASDAQ US Dividend Achievers Select Index. IShares Core Dividend Growth ETF has $29.66 billion in assets, Vanguard Dividend Appreciation ETF has $83.65 billion. DGRO has an expense ratio of 0.08% and VIG charges 0.06%.
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 Invesco S&P 500 Quality ETF (SPHQ) a Strong ETF Right Now?
A smart beta exchange traded fund, the Invesco S&P 500 Quality ETF (SPHQ - Free Report) debuted on 12/06/2005, and offers broad exposure to the Style Box - Large Cap Blend category of the market.
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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
SPHQ is managed by Invesco, and this fund has amassed over $10.80 billion, which makes it one of the largest ETFs in the Style Box - Large Cap Blend. Before fees and expenses, SPHQ seeks to match the performance of the S&P 500 Quality Index.
The S&P 500 Quality Index tracks the performance of stocks in the S&P 500 Index that have the highest quality score, which is calculated based on three fundamental measures, return on equity, accruals ratio and financial leverage ratio.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for SPHQ are 0.15%, which makes it one of the cheaper products in the space.
It's 12-month trailing dividend yield comes in at 1.17%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 33.70% of the portfolio, the fund has heaviest allocation to the Information Technology sector; Consumer Staples and Industrials round out the top three.
When you look at individual holdings, Johnson & Johnson (JNJ - Free Report) accounts for about 5.69% of the fund's total assets, followed by Mastercard Inc (MA - Free Report) and Apple Inc (AAPL - Free Report) .
Its top 10 holdings account for approximately 45.07% of SPHQ's total assets under management.
Performance and Risk
The ETF has gained about 21.86% so far this year and is up roughly 26.13% in the last one year (as of 09/04/2024). In the past 52-week period, it has traded between $47.93 and $66.64.
The ETF has a beta of 0.92 and standard deviation of 17.28% for the trailing three-year period, making it a medium risk choice in the space. With about 102 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco S&P 500 Quality 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 Dividend Growth ETF (DGRO - Free Report) tracks Morningstar US Dividend Growth Index and the Vanguard Dividend Appreciation ETF (VIG - Free Report) tracks NASDAQ US Dividend Achievers Select Index. IShares Core Dividend Growth ETF has $29.66 billion in assets, Vanguard Dividend Appreciation ETF has $83.65 billion. DGRO has an expense ratio of 0.08% and VIG charges 0.06%.
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.