News

Making its debut on 04/24/2003, smart beta exchange traded fund Invesco S&P 500 Equal Weight ETF (RSP) provides investors broad exposure to the Style Box - Large Cap Blend category of the market.

What Are Smart Beta ETFs?

For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.

A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.

There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.

Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.

Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.

Fund Sponsor & Index

The fund is managed by Invesco, and has been able to amass over $54.03 billion, which makes it one of the largest ETFs in the Style Box - Large Cap Blend. Before fees and expenses, RSP seeks to match the performance of the S&P 500 Equal Weight Index.

The S&P 500 Equal Weight Index equally weights the stocks in the S&P 500 Index.

Cost & Other Expenses

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

Annual operating expenses for this ETF are 0.20%, making it on par with most peer products in the space.

RSP's 12-month trailing dividend yield is 1.18%.

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 15.70% of the portfolio. Financials and Information Technology round out the top three.

When you look at individual holdings, First Solar Inc (FSLR) accounts for about 0.33% of the fund's total assets, followed by Micron Technology Inc (MU) and Nvidia Corp (NVDA).

RSP's top 10 holdings account for about 2.82% of its total assets under management.

Performance and Risk

The ETF return is roughly 4.16% so far this year and it's up approximately 10.87% in the last one year (as of 07/08/2024). In the past 52-week period, it has traded between $133.66 and $169.37.

The ETF has a beta of 1.05 and standard deviation of 16.86% for the trailing three-year period. With about 505 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco S&P 500 Equal Weight ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.

IShares Core S&P 500 ETF (IVV) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY) tracks S&P 500 Index. IShares Core S&P 500 ETF has $502.59 billion in assets, SPDR S&P 500 ETF has $556.70 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Blend.

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 ETF (RSP): ETF Research Reports

First Solar, Inc. (FSLR) : Free Stock Analysis Report

Micron Technology, Inc. (MU) : Free Stock Analysis Report

NVIDIA Corporation (NVDA) : Free Stock Analysis Report

SPDR S&P 500 ETF (SPY): ETF Research Reports

iShares Core S&P 500 ETF (IVV): ETF Research Reports

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