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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.

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.

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 15, placing it in bottom 6%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $205.94 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

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.

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 1.43%.

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 in the Industrials sector--about 100% of the portfolio.

Looking at individual holdings, Northrop Grumman Corp (NOC) accounts for about 1.76% of total assets, followed by Transdigm Group Inc (TDG) and United Parcel Service Inc (UPS).

The top 10 holdings account for about 16.44% of total assets under management.

Performance and Risk

The ETF has gained about 18.06% and is down about -1.64% so far this year and in the past one year (as of 08/21/2019), respectively. RGI has traded between $96.98 and $129.25 during this last 52-week period.

The ETF has a beta of 1.20 and standard deviation of 15.11% for the trailing three-year period, making it a medium risk choice in the space. With about 69 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 $3.48 B in assets, Industrial Select Sector SPDR Fund has $9.61 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
 
Northrop Grumman Corporation (NOC) : Free Stock Analysis Report
 
Transdigm Group Incorporated (TDG) : Free Stock Analysis Report
 
Industrial Select Sector SPDR Fund (XLI): ETF Research Reports
 
Vanguard Industrials ETF (VIS): ETF Research Reports
 
United Parcel Service, Inc. (UPS) : Free Stock Analysis Report
 
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