Is Invesco S&P 500 Equal Weight Financials ETF (RSPF) a Strong ETF Right Now?
Designed to provide broad exposure to the Financials ETFs category of the market, the Invesco S&P 500 Equal Weight Financials ETF (RSPF) is a smart beta exchange traded fund launched on 11/01/2006.
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.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
RSPF is managed by Invesco, and this fund has amassed over $254.44 million, which makes it one of the average sized ETFs in the Financials ETFs. RSPF, before fees and expenses, seeks to match the performance of the S&P 500 EQUAL WEIGHT FINANCIALS INDEX .
The S&P 500 Equal Weight Financials Index equally weights stocks in the financial sector of the S&P 500 Index.
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 RSPF, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 2.33%.
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.
This ETF has heaviest allocation in the Financials sector - about 100% of the portfolio.
Looking at individual holdings, Global Payments Inc (GPN) accounts for about 1.66% of total assets, followed by Metlife Inc (MET) and Brown & Brown Inc (BRO).
The top 10 holdings account for about 15.42% of total assets under management.
Performance and Risk
Year-to-date, the Invesco S&P 500 Equal Weight Financials ETF has gained about 2.39% so far, and it's up approximately 0% over the last 12 months (as of 09/22/2023). RSPF has traded between $49.76 and $54.83 in this past 52-week period.
The fund has a beta of 1.08. With about 73 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco S&P 500 Equal Weight Financials ETF is not a suitable option for investors seeking to outperform the Financials ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
Vanguard Financials ETF (VFH) tracks MSCI US Investable Market Financials 25/50 Index and the Financial Select Sector SPDR ETF (XLF) tracks Financial Select Sector Index. Vanguard Financials ETF has $8.59 billion in assets, Financial Select Sector SPDR ETF has $32.44 billion. VFH has an expense ratio of 0.10% and XLF 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 Financials 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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Invesco S&P 500 Equal Weight Financials ETF (RSPF): ETF Research Reports
MetLife, Inc. (MET) : Free Stock Analysis Report
Global Payments Inc. (GPN) : Free Stock Analysis Report
Brown & Brown, Inc. (BRO) : Free Stock Analysis Report
Financial Select Sector SPDR ETF (XLF): ETF Research Reports
Vanguard Financials ETF (VFH): ETF Research Reports
