Looking for broad exposure to the Large Cap Blend segment of the US equity market? You should consider the Invesco S&P 500 Equal Weight ETF (RSP), a passively managed exchange traded fund launched on 04/24/2003.
The fund is sponsored by Invesco. It has amassed assets over $31.40 billion, making it one of the largest ETFs attempting to match the Large Cap Blend segment of the US equity market.
Why Large Cap Blend
Companies that find themselves in the large cap category typically 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.
Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.
Costs
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.20%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 1.28%.
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 to the Information Technology sector--about 15% of the portfolio. Industrials and Financials round out the top three.
Looking at individual holdings, Tesla Inc (NASDAQ:TSLA) accounts for about 0.30% of total assets, followed by Enphase Energy Inc (NASDAQ:ENPH) and Marathon Oil Corp (MRO).
The top 10 holdings account for about 2.74% of total assets under management.
Performance and Risk
RSP seeks to match the performance of the S&P 500 Equal Weight Index before fees and expenses. The S&P 500 Equal Weight Index is an unmanaged equal weighted version of the S&P 500 Index, which is an unmanaged capitalization weighted index comprised of 500 common stocks on a statistical basis.
The ETF return is roughly 29.89% so far this year and is up about 39.38% in the last one year (as of 11/15/2021). In the past 52-week period, it has traded between $120.74 and $161.65.
The ETF has a beta of 1.10 and standard deviation of 24.54% for the trailing three-year period. With about 507 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco S&P 500 Equal Weight 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, RSP is a sufficient option for those seeking exposure to the Style Box - Large Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Core S&P 500 ETF (IVV) and the SPDR S&P 500 ETF (SPY) track a similar index. While iShares Core S&P 500 ETF has $323.93 billion in assets, SPDR S&P 500 ETF has $427.36 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.
Bottom-Line
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.
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
Marathon Oil Corporation (NYSE:MRO): Free Stock Analysis Report
Tesla, Inc. (TSLA): Free Stock Analysis Report
SPDR S&P 500 ETF (SPY): ETF Research Reports
Enphase Energy, Inc. (ENPH): Free Stock Analysis Report
iShares Core S&P 500 ETF (IVV): ETF Research Reports
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