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.
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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
The fund is managed by Invesco, and has been able to amass over $281.16 million, which makes it one of the average sized ETFs in the Financials ETFs. Before fees and expenses, this particular fund 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
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.
Operating expenses on an annual basis are 0.40% for this ETF, which makes it on par with most peer products in the space.
RSPF's 12-month trailing dividend yield is 2.38%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For RSPF, it has heaviest allocation in the Financials sector --about 100% of the portfolio.
When you look at individual holdings, Fleetcor Technologies Inc (FLT) accounts for about 1.70% of the fund's total assets, followed by Brown & Brown Inc (BRO) and S&p Global Inc (SPGI).
RSPF's top 10 holdings account for about 16.34% of its total assets under management.
Performance and Risk
So far this year, RSPF has lost about -1.78%, and it's up approximately 0% in the last one year (as of 06/27/2023). During this past 52-week period, the fund has traded between $49.76 and $51.56.
RSPF has a beta of 1.07. With about 72 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 $7.55 billion in assets, Financial Select Sector SPDR ETF has $31.53 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
Brown & Brown, Inc. (BRO) : Free Stock Analysis Report
FleetCor Technologies, Inc. (FLT) : Free Stock Analysis Report
Financial Select Sector SPDR ETF (XLF): ETF Research Reports
S&P Global Inc. (SPGI) : Free Stock Analysis Report
Vanguard Financials ETF (VFH): ETF Research Reports
