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Should You Invest in the Invesco S&P 500 Equal Weight Industrials ETF (RGI)?

Sweta Killa

If you're interested in broad exposure to the Industrials - Broad segment of the equity market, look no further than the Invesco S&P 500 Equal Weight Industrials ETF (RGI), a passively managed exchange traded fund launched on 11/01/2006.

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Industrials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 14, placing it in bottom 13%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $224.30 M, making it one of the average sized ETFs attempting to match the performance of the Industrials - Broad segment of the equity market. RGI seeks to match the performance of the S&P 500 Equal Weight Industrials Index before fees and expenses.

This index is an unmanaged equal weighted version of the S&P 500 Industrials Index that consists of the common stocks of the following industries: aerospace & defense, building products, construction & engineering, electrical equipment, conglomerates, machinery; commercial services & supplies, air freight & logistics, airlines, marine, road & rail transportation infrastructure.

Costs

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

Annual operating expenses for this ETF are 0.40%, making it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 1.35%.

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 Industrials sector--about 100% of the portfolio.

Looking at individual holdings, Jb Hunt Transport Services Inc (JBHT) accounts for about 1.64% of total assets, followed by Ihs Markit Ltd (INFO) and Arconic Inc (ARNC).

The top 10 holdings account for about 15.65% of total assets under management.

Performance and Risk

The ETF has added roughly 24.82% and is up about 6.76% so far this year and in the past one year (as of 07/29/2019), respectively. RGI has traded between $96.98 and $129.25 during this last 52-week period.

The ETF has a beta of 1.21 and standard deviation of 14.73% for the trailing three-year period, making it a medium risk choice in the space. With about 68 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco S&P 500 Equal Weight Industrials 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, RGI is a reasonable option for those seeking exposure to the Industrials ETFs area of the market. Investors might also want to consider some other ETF options in the space.

Vanguard Industrials ETF (VIS) tracks MSCI US Investable Market Industrials 25/50 Index and the Industrial Select Sector SPDR Fund (XLI) tracks Industrial Select Sector Index. Vanguard Industrials ETF has $3.65 B in assets, Industrial Select Sector SPDR Fund has $10.54 B. VIS has an expense ratio of 0.10% and XLI charges 0.13%.

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 Industrials ETF (RGI): ETF Research Reports
 
J.B. Hunt Transport Services, Inc. (JBHT) : Free Stock Analysis Report
 
IHS Markit Ltd. (INFO) : Free Stock Analysis Report
 
Industrial Select Sector SPDR Fund (XLI): ETF Research Reports
 
Vanguard Industrials ETF (VIS): ETF Research Reports
 
Arconic Inc. (ARNC) : Free Stock Analysis Report
 
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