Should ALPS Equal Sector Weight ETF (EQL) Be on Your Investing Radar?
The ALPS Equal Sector Weight ETF (EQL) was launched on 07/07/2009, and is a passively managed exchange traded fund designed to offer broad exposure to the Large Cap Blend segment of the US equity market.
The fund is sponsored by Alps. It has amassed assets over $325.53 million, making it one of the average sized ETFs attempting to match the Large Cap Blend segment of the US equity market.
Why Large Cap Blend
Companies that find themselves in the large cap category typically have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.
Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.
Costs
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.
Annual operating expenses for this ETF are 0.26%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.92%.
Sector Exposure and Top Holdings
ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
Looking at individual holdings, Technologyselectsectorspdrfund (XLK) accounts for about 9.85% of total assets, followed by Realestateselectsectorspdrfund (XLRE) and Financialselectsectorspdrfund (XLF).
The top 10 holdings account for about 91.97% of total assets under management.
Performance and Risk
EQL seeks to match the performance of the NYSE Select Sector Equal Weight Index before fees and expenses. 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.
The ETF has added roughly 2.37% so far this year and is up about 13.55% in the last one year (as of 02/20/2024). In the past 52-week period, it has traded between $94.86 and $112.64.
The ETF has a beta of 0.96 and standard deviation of 15.65% for the trailing three-year period, making it a medium risk choice in the space. With about 12 holdings, it has more concentrated exposure than peers.
Alternatives
ALPS Equal Sector Weight ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, EQL is a reasonable option for those seeking exposure to the Style Box - Large Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Core S&P 500 ETF (IVV) and the SPDR S&P 500 ETF (SPY) track a similar index. While iShares Core S&P 500 ETF has $434 billion in assets, SPDR S&P 500 ETF has $489.38 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.
Bottom-Line
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
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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ALPS Equal Sector Weight ETF (EQL): ETF Research Reports
SPDR S&P 500 ETF (SPY): ETF Research Reports
Financial Select Sector SPDR ETF (XLF): ETF Research Reports
Technology Select Sector SPDR ETF (XLK): ETF Research Reports
iShares Core S&P 500 ETF (IVV): ETF Research Reports
Real Estate Select Sector SPDR ETF (XLRE): ETF Research Reports
