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Should Invesco S&P 500 Equal Weight ETF (RSP) Be on Your Investing Radar?

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Launched on 04/24/2003, the Invesco S&P 500 Equal Weight ETF (RSP) is a passively managed exchange traded fund designed to provide a broad exposure to the Large Cap Blend segment of the US equity market.

The fund is sponsored by Invesco. It has amassed assets over $31.40 billion, making it one of the largest ETFs attempting to match the Large Cap Blend segment of the US equity market.

Why Large Cap Blend

Large cap companies typically have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.

Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.

Costs

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

Annual operating expenses for this ETF are 0.20%, making it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 1.28%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Information Technology sector--about 15% of the portfolio. Industrials and Financials round out the top three.

Looking at individual holdings, Tesla Inc (TSLA) accounts for about 0.30% of total assets, followed by Enphase Energy Inc (ENPH) and Marathon Oil Corp (MRO).

The top 10 holdings account for about 2.74% of total assets under management.

Performance and Risk

RSP seeks to match the performance of the S&P 500 Equal Weight Index before fees and expenses. The S&P 500 Equal Weight Index is an unmanaged equal weighted version of the S&P 500 Index, which is an unmanaged capitalization weighted index comprised of 500 common stocks on a statistical basis.

The ETF return is roughly 29.89% so far this year and was up about 39.38% in the last one year (as of 11/15/2021). In the past 52-week period, it has traded between $120.74 and $161.65.

The ETF has a beta of 1.10 and standard deviation of 24.54% for the trailing three-year period. With about 507 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco S&P 500 Equal 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, RSP is a sufficient 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 $323.93 billion in assets, SPDR S&P 500 ETF has $427.36 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.

Bottom-Line

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

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 ETF (RSP): ETF Research Reports
 
Marathon Oil Corporation (MRO) : Free Stock Analysis Report
 
Tesla, Inc. (TSLA) : Free Stock Analysis Report
 
SPDR S&P 500 ETF (SPY): ETF Research Reports
 
Enphase Energy, Inc. (ENPH) : Free Stock Analysis Report
 
iShares Core S&P 500 ETF (IVV): ETF Research Reports
 
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