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Should Invesco S&P Ultra Dividend Revenue ETF (RDIV) Be on Your Investing Radar?

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Designed to provide broad exposure to the Large Cap Value segment of the US equity market, the Invesco S&P Ultra Dividend Revenue ETF (RDIV) is a passively managed exchange traded fund launched on 10/01/2013.

The fund is sponsored by Invesco. It has amassed assets over $765.81 million, making it one of the average sized ETFs attempting to match the Large Cap Value segment of the US equity market.

Why Large Cap Value

Companies that fall in the large cap category tend to have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.

While value stocks have lower than average price-to-earnings and price-to-book ratios, they also have lower than average sales and earnings growth rates. Considering long-term performance, value stocks have outperformed growth stocks in almost all markets; however, they are more likely to underperform growth stocks in strong bull markets.

Costs

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.

Annual operating expenses for this ETF are 0.39%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 4.69%.

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.

This ETF has heaviest allocation to the Financials sector--about 30.50% of the portfolio. Energy and Materials round out the top three.

Looking at individual holdings, Kraft Heinz Co/the (KHC) accounts for about 5.33% of total assets, followed by Metlife Inc (MET) and Lyondellbasell Industries Nv (LYB).

The top 10 holdings account for about 49.01% of total assets under management.

Performance and Risk

RDIV seeks to match the performance of the OFI Revenue Weighted Ultra Dividend Index before fees and expenses. The OFI Revenue Weighted Ultra Dividend Index is constructed by identifying the top 60 securities from the S&P 900 Index with the highest average of the 1-year trailing dividend yields for the current quarter and each of the past three quarters which are then re-weighted according to the revenue earned by the companies.

The ETF has gained about 25.01% so far this year and is up roughly 52.89% in the last one year (as of 06/24/2021). In the past 52-week period, it has traded between $25.99 and $43.55.

The ETF has a beta of 1.31 and standard deviation of 31.25% for the trailing three-year period, making it a medium risk choice in the space. With about 61 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco S&P Ultra Dividend Revenue ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, RDIV is an excellent option for investors seeking exposure to the Style Box - Large Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.

The iShares Russell 1000 Value ETF (IWD) and the Vanguard Value ETF (VTV) track a similar index. While iShares Russell 1000 Value ETF has $53.39 billion in assets, Vanguard Value ETF has $80.05 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.

Bottom-Line

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also 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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Invesco S&P Ultra Dividend Revenue ETF (RDIV): ETF Research Reports
 
MetLife, Inc. (MET) : Free Stock Analysis Report
 
LyondellBasell Industries N.V. (LYB) : Free Stock Analysis Report
 
The Kraft Heinz Company (KHC) : Free Stock Analysis Report
 
Vanguard Value ETF (VTV): ETF Research Reports
 
iShares Russell 1000 Value ETF (IWD): ETF Research Reports
 
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Zacks Investment Research