The Invesco S&P 500 Equal Weight Industrials ETF (RGI) was launched on 11/01/2006, and is a smart beta exchange traded fund designed to offer broad exposure to the Industrials ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
If you’re the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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 sponsored by Invesco. It has amassed assets over $361.89 million, making it one of the average sized ETFs in the Industrials ETFs. Before fees and expenses, RGI seeks to match the performance of the S&P 500 Equal Weight Industrials Index.
The S&P 500 Equal Weight Industrials Index equally weights stocks in the industrials sector of the S&P 500 Index.
Cost & Other Expenses
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.
RGI’s 12-month trailing dividend yield is 0.86%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, although it’s still important for investors to research a fund’s holdings.
Representing 98.60% of the portfolio, the fund has the heaviest allocation to the Industrials sector.
Taking into account individual holdings, Fedex Corp (FDX) accounts for about 1.69% of the fund’s total assets, followed by Boeing Co/the (BA) and United Parcel Service Inc (UPS).
RGI’s top 10 holdings account for about 15.22% of its total assets under management.
Performance and Risk
So far this year, RGI has lost about -8.45%, and is down about -4.54% in the last one year (as of 08/05/2022). During this past 52-week period, the fund has traded between $156.14 and $200.30.
The ETF has a beta of 1.17 and standard deviation of 27.12% for the trailing three-year period, making it a medium risk choice in the space. With about 73 holdings, it effectively diversifies company-specific risk.
Invesco S&P 500 Equal Weight Industrials ETF is a reasonable option for investors seeking to outperform the Industrials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Industrials ETF (VIS) tracks the MSCI US Investable Market Industrials 25/50 Index and the Industrial Select Sector SPDR ETF (XLI) tracks the Industrial Select Sector Index. Vanguard Industrials ETF has $3.63 billion in assets, Industrial Select Sector SPDR ETF has $13.26 billion. VIS has an expense ratio of 0.10% and XLI charges 0.10%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Industrials ETFs.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on the 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
The Boeing Company (BA): Free Stock Analysis Report
United Parcel Service, Inc. (UPS): Free Stock Analysis Report
FedEx Corporation (FDX): Free Stock Analysis Report
Vanguard Industrials ETF (VIS): ETF Research Reports
Industrial Select Sector SPDR ETF (XLI): ETF Research Reports
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Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.