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Is Invesco S&P 500 Equal Weight Consumer Discretionary ETF (RSPD) a Strong ETF Right Now?
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The Invesco S&P 500 Equal Weight Consumer Discretionary ETF (RSPD - Free Report) was launched on 11/01/2006, and is a smart beta exchange traded fund designed to offer broad exposure to the Consumer Discretionary ETFs category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
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.
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, and has been able to amass over $274.67 million, which makes it one of the larger ETFs in the Consumer Discretionary ETFs. This particular fund, before fees and expenses, seeks to match the performance of the S&P 500 EQL WEIGHT CONS DISCRETIONARY ID.
The S&P 500 Equal Weight Consumer Discretionary Index equally weights stocks in the consumer discretionary sector of the S&P 500 Index.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
With one of the cheaper products in the space, this ETF has annual operating expenses of 0.40%.
The fund has a 12-month trailing dividend yield of 0.89%.
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.
For RSPD, it has heaviest allocation in the Consumer Discretionary sector --about 100% of the portfolio.
Taking into account individual holdings, Mohawk Industries Inc (MHK - Free Report) accounts for about 2.53% of the fund's total assets, followed by Dr Horton Inc (DHI - Free Report) and Nvr Inc (NVR - Free Report) .
Its top 10 holdings account for approximately 22.41% of RSPD's total assets under management.
Performance and Risk
The ETF has gained about 7.96% and was up about 22.52% so far this year and in the past one year (as of 09/24/2024), respectively. RSPD has traded between $38.50 and $51.02 during this last 52-week period.
RSPD has a beta of 1.38 and standard deviation of 23.10% for the trailing three-year period. With about 54 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco S&P 500 Equal Weight Consumer Discretionary ETF is a reasonable option for investors seeking to outperform the Consumer Discretionary ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Consumer Discretionary ETF (VCR - Free Report) tracks MSCI US Investable Market Consumer Discretionary 25/50 Index and the Consumer Discretionary Select Sector SPDR ETF (XLY - Free Report) tracks Consumer Discretionary Select Sector Index. Vanguard Consumer Discretionary ETF has $5.86 billion in assets, Consumer Discretionary Select Sector SPDR ETF has $19.17 billion. VCR has an expense ratio of 0.10% and XLY 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 Consumer Discretionary 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 Consumer Discretionary ETF (RSPD) a Strong ETF Right Now?
The Invesco S&P 500 Equal Weight Consumer Discretionary ETF (RSPD - Free Report) was launched on 11/01/2006, and is a smart beta exchange traded fund designed to offer broad exposure to the Consumer Discretionary ETFs category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
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.
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, and has been able to amass over $274.67 million, which makes it one of the larger ETFs in the Consumer Discretionary ETFs. This particular fund, before fees and expenses, seeks to match the performance of the S&P 500 EQL WEIGHT CONS DISCRETIONARY ID.
The S&P 500 Equal Weight Consumer Discretionary Index equally weights stocks in the consumer discretionary sector of the S&P 500 Index.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
With one of the cheaper products in the space, this ETF has annual operating expenses of 0.40%.
The fund has a 12-month trailing dividend yield of 0.89%.
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.
For RSPD, it has heaviest allocation in the Consumer Discretionary sector --about 100% of the portfolio.
Taking into account individual holdings, Mohawk Industries Inc (MHK - Free Report) accounts for about 2.53% of the fund's total assets, followed by Dr Horton Inc (DHI - Free Report) and Nvr Inc (NVR - Free Report) .
Its top 10 holdings account for approximately 22.41% of RSPD's total assets under management.
Performance and Risk
The ETF has gained about 7.96% and was up about 22.52% so far this year and in the past one year (as of 09/24/2024), respectively. RSPD has traded between $38.50 and $51.02 during this last 52-week period.
RSPD has a beta of 1.38 and standard deviation of 23.10% for the trailing three-year period. With about 54 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco S&P 500 Equal Weight Consumer Discretionary ETF is a reasonable option for investors seeking to outperform the Consumer Discretionary ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Consumer Discretionary ETF (VCR - Free Report) tracks MSCI US Investable Market Consumer Discretionary 25/50 Index and the Consumer Discretionary Select Sector SPDR ETF (XLY - Free Report) tracks Consumer Discretionary Select Sector Index. Vanguard Consumer Discretionary ETF has $5.86 billion in assets, Consumer Discretionary Select Sector SPDR ETF has $19.17 billion. VCR has an expense ratio of 0.10% and XLY 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 Consumer Discretionary 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.