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Is Guggenheim S&P 500 Equal Weight Industrials ETF (RGI) a Hot ETF Right Now?
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A smart beta exchange traded fund, the Guggenheim S&P 500 Equal Weight Industrials ETF debuted on 11/01/2006, and offers broad exposure to the Industrials ETFs category of the U.S. equity 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.
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.
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
Because the fund has amassed over $301.49 M, this makes it one of the average sized ETFs in the Industrials ETFs. RGI is managed by Invesco Powershares. Before fees and expenses, RGI seeks to match the performance of the S&P 500 Equal Weight Industrials Index.
This index is an unmanaged equal weighted version of the S&P 500 Industrials Index that consists of the common stocks of the following industries: aerospace & defense, building products, construction & engineering, electrical equipment, conglomerates, machinery; commercial services & supplies, air freight & logistics, airlines, marine, road & rail transportation infrastructure.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.40% for this ETF, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.20%.
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.
For RGI, it has heaviest allocation in the Industrials sector --about 100% of the portfolio.
Taking into account individual holdings, Transdigm Group Inc (TDG - Free Report) accounts for about 1.71% of the fund's total assets, followed by Textron Inc (TXT - Free Report) and Csx Corp (CSX - Free Report) .
Its top 10 holdings account for approximately 15.84% of RGI's total assets under management.
Performance and Risk
So far this year, the ETF has lost about -1.73%, and is up roughly 13.74% in the last one year (as of 05/17/2018). RGI has traded between $103.35 and $127.83 in the past 52-week period.
RGI has a beta of 1.10 and standard deviation of 14.90% for the trailing three-year period, which makes the fund a medium choice in the space. With about 70 holdings, it effectively diversifies company-specific risk.
Alternatives
Guggenheim S&P 500 Equal Weight Industrials ETF is an excellent option for investors seeking to outperform the Industrials ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
Vanguard Industrials ETF (VIS - Free Report) tracks MSCI US Investable Market Industrials 25/50 Index and the Industrial Select Sector SPDR Fund (XLI - Free Report) tracks Industrial Select Sector Index. Vanguard Industrials ETF has $3.77 B in assets, Industrial Select Sector SPDR Fund has $12.92 B. VIS has an expense ratio of 0.10% and XLI charges 0.13%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Industrials 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 Guggenheim S&P 500 Equal Weight Industrials ETF (RGI) a Hot ETF Right Now?
A smart beta exchange traded fund, the Guggenheim S&P 500 Equal Weight Industrials ETF debuted on 11/01/2006, and offers broad exposure to the Industrials ETFs category of the U.S. equity 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.
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.
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
Because the fund has amassed over $301.49 M, this makes it one of the average sized ETFs in the Industrials ETFs. RGI is managed by Invesco Powershares. Before fees and expenses, RGI seeks to match the performance of the S&P 500 Equal Weight Industrials Index.
This index is an unmanaged equal weighted version of the S&P 500 Industrials Index that consists of the common stocks of the following industries: aerospace & defense, building products, construction & engineering, electrical equipment, conglomerates, machinery; commercial services & supplies, air freight & logistics, airlines, marine, road & rail transportation infrastructure.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.40% for this ETF, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.20%.
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.
For RGI, it has heaviest allocation in the Industrials sector --about 100% of the portfolio.
Taking into account individual holdings, Transdigm Group Inc (TDG - Free Report) accounts for about 1.71% of the fund's total assets, followed by Textron Inc (TXT - Free Report) and Csx Corp (CSX - Free Report) .
Its top 10 holdings account for approximately 15.84% of RGI's total assets under management.
Performance and Risk
So far this year, the ETF has lost about -1.73%, and is up roughly 13.74% in the last one year (as of 05/17/2018). RGI has traded between $103.35 and $127.83 in the past 52-week period.
RGI has a beta of 1.10 and standard deviation of 14.90% for the trailing three-year period, which makes the fund a medium choice in the space. With about 70 holdings, it effectively diversifies company-specific risk.
Alternatives
Guggenheim S&P 500 Equal Weight Industrials ETF is an excellent option for investors seeking to outperform the Industrials ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
Vanguard Industrials ETF (VIS - Free Report) tracks MSCI US Investable Market Industrials 25/50 Index and the Industrial Select Sector SPDR Fund (XLI - Free Report) tracks Industrial Select Sector Index. Vanguard Industrials ETF has $3.77 B in assets, Industrial Select Sector SPDR Fund has $12.92 B. VIS has an expense ratio of 0.10% and XLI charges 0.13%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Industrials 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.