Is Invesco S&P 500 Equal Weight Materials ETF (RSPM) a Strong ETF Right Now?
The Invesco S&P 500 Equal Weight Materials ETF (RSPM) was launched on 11/01/2006, and is a smart beta exchange traded fund designed to offer broad exposure to the Materials ETFs 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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
RSPM is managed by Invesco, and this fund has amassed over $313.56 million, which makes it one of the average sized ETFs in the Materials ETFs. Before fees and expenses, this particular fund seeks to match the performance of the S&P 500 EQUAL WEIGHT MATERIALS INDEX .
The S&P 500 Equal Weight Materials Index equally weights stocks in the materials sector of the S&P 500 Index.
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.
With one of the cheaper products in the space, this ETF has annual operating expenses of 0.40%.
RSPM's 12-month trailing dividend yield is 2.22%.
Sector Exposure and Top Holdings
ETFs offer 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.
Representing 100% of the portfolio, the fund has heaviest allocation to the Materials sector.
When you look at individual holdings, Martin Marietta Materials Inc (MLM) accounts for about 4.33% of the fund's total assets, followed by Vulcan Materials Co (VMC) and Sherwin-Williams Co/the (SHW).
Its top 10 holdings account for approximately 38.56% of RSPM's total assets under management.
Performance and Risk
The ETF return is roughly 1.95% and was up about 0% so far this year and in the past one year (as of 06/28/2023), respectively. RSPM has traded between $155.94 and $160.94 during this last 52-week period.
The fund has a beta of 1.10. With about 29 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco S&P 500 Equal Weight Materials ETF is a reasonable option for investors seeking to outperform the Materials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Materials Select Sector SPDR ETF (XLB) tracks Materials Select Sector Index and the FlexShares Morningstar Global Upstream Natural Resources ETF (GUNR) tracks Morningstar Global Upstream Natural Resources Index. Materials Select Sector SPDR ETF has $5.77 billion in assets, FlexShares Morningstar Global Upstream Natural Resources ETF has $7.08 billion. XLB has an expense ratio of 0.10% and GUNR charges 0.46%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Materials 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 Materials ETF (RSPM): ETF Research Reports
The Sherwin-Williams Company (SHW) : Free Stock Analysis Report
Vulcan Materials Company (VMC) : Free Stock Analysis Report
Martin Marietta Materials, Inc. (MLM) : Free Stock Analysis Report
Materials Select Sector SPDR ETF (XLB): ETF Research Reports
FlexShares Morningstar Global Upstream Natural Resources ETF (GUNR): ETF Research Reports
