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

Zacks Equity Research

Looking for broad exposure to the Financials - Broad segment of the equity market? You should consider the Invesco S&P 500 Equal Weight Financials ETF (RYF), a passively managed exchange traded fund launched on 11/01/2006.

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Financials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 10, placing it in bottom 38%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $285.73 M, making it one of the average sized ETFs attempting to match the performance of the Financials - Broad segment of the equity market. RYF seeks to match the performance of the S&P 500 Equal Weight Financials Index before fees and expenses.

The S&P 500 Equal Weight Financials Index is an unmanaged equal weighted version of the S&P 500 Financials Index that consists of the common stocks of the following industries: banks, diversified financials, brokerage, asset manage-ment insurance and real estate, including investment trusts that comprise the Financials sector of the S&P 500 Index.

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 on par with most peer products in the space.

It has a 12-month trailing dividend yield of 2.20%.

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.

This ETF has heaviest allocation in the Financials sector--about 100% of the portfolio.

Looking at individual holdings, Msci Inc (MSCI) accounts for about 1.80% of total assets, followed by American International Group Inc (AIG) and Cincinnati Financial Corp (CINF).

The top 10 holdings account for about 16.94% of total assets under management.

Performance and Risk

Year-to-date, the Invesco S&P 500 Equal Weight Financials ETF return is roughly 18.56% so far, and it's up approximately 0.98% over the last 12 months (as of 06/26/2019). RYF has traded between $34.13 and $45.11 in this past 52-week period.

The ETF has a beta of 1.13 and standard deviation of 16.01% for the trailing three-year period, making it a medium risk choice in the space. With about 67 holdings, it effectively diversifies company-specific risk.

Alternatives

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

Vanguard Financials ETF (VFH) tracks MSCI US Investable Market Financials 25/50 Index and the Financial Select Sector SPDR Fund (XLF) tracks Financial Select Sector Index. Vanguard Financials ETF has $7.45 B in assets, Financial Select Sector SPDR Fund has $23.72 B. VFH has an expense ratio of 0.10% and XLF 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 Financials ETF (RYF): ETF Research Reports
 
MSCI Inc (MSCI) : Free Stock Analysis Report
 
Financial Select Sector SPDR Fund (XLF): ETF Research Reports
 
Vanguard Financials ETF (VFH): ETF Research Reports
 
American International Group, Inc. (AIG) : Free Stock Analysis Report
 
Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report
 
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