ETFs
Is the Invesco S&P 100 Equal Weight ETF (EQWL) a strong ETF right now?
The Invesco S&P 100 Equal Weight ETF (EQWL) was launched on 12/01/2006 and is a smart beta exchange traded fund designed to provide broad exposure to the Style Box – Large Cap Blend category of the market.
What are Smart Beta ETFs?
Market-cap-weighted indices were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Because market-cap-weighted indices offer a low-cost, convenient and transparent way to replicate market returns, they are ideal for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market through better stock selection choose to invest in another class of funds that follow non-market-cap-weighted strategies, commonly referred to as smart beta.
These indices attempt to select stocks that have better risk-return performance prospects, based on certain fundamental characteristics or a combination of these characteristics.
The smart beta space offers investors many different choices, from equal weighting, one of the simplest strategies, to more complex strategies like fundamental and volatility/momentum weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund and Index Sponsor
EQWL is managed by Invesco and this fund has raised over $679.72 million, making it one of the mid-sized ETFs in the Style Box – Large Cap Blend. Before fees and expenses, this particular fund seeks to match the performance of the Russell Top 200 Equal Weight Index.
The S&P 100 Equal Weight Index is designed to provide equal-weight exposure to the stocks of the 200 largest companies in the U.S. stock market.
Costs and other expenses
For ETF investors, expense ratios are an important factor to consider when evaluating a fund’s performance; over the long term, cheaper funds actually have the ability to outperform their more expensive cousins if all else remains the same.
Operating expenses on an annual basis stand at 0.25% for EQWL, which puts it on par with most peer products in the space.
EQWL’s trailing 12-month dividend yield is 1.93%.
Sector exposure and main holdings
ETFs offer diversified exposure and thus minimize the risk associated with any one security, but it is always important to examine a fund’s assets in detail before investing. Most ETFs are very transparent products and many disclose their assets on a daily basis.
Representing 18.60% of the portfolio, the fund is mainly allocated to the financial sector; information technology and industrial stocks complete the top three.
The story continues
Taking into account individual holdings, Nvidia Corp (NVDA) represents approximately 1.52% of the fund’s total assets, followed by Broadcom Inc (AVGO) and Qualcomm Inc (QCOM).
Its top 10 holdings represent approximately 12.65% of EQWL’s total assets under management.
Performance and risk
Since the beginning of the year, EQWL has gained approximately 9.35% and is up approximately 18.18% over the past year (as of 05/07/2024). Over the past 52 weeks, the fund has traded between $74.98 and $95.04.
EQWL has a beta of 0.97 and a standard deviation of 15.41% over the past three years, making the fund a medium-risk pick in this sector. With around 103 stocks, it effectively diversifies company-specific risk.
Alternatives
The Invesco S&P 100 Equal Weight ETF is a reasonable option for investors looking to outperform the large-cap blend (Style Box) segment of the market. However, there are other ETFs in this sector that investors may want to consider.
The IShares Core S&P 500 ETF (IVV) tracks the S&P 500 Index and the SPDR S&P 500 ETF (SPY) tracks the S&P 500 Index. The IShares Core S&P 500 ETF has $499.53 billion in assets, the SPDR S&P 500 ETF has $553.57 billion. The IVV has an expense ratio of 0.03% and the SPY charges 0.09%.
Investors looking for cheaper, less risky options should consider traditional market-cap-weighted ETFs that aim to match the returns of the Style Box – Large Cap Blend.
Conclusion
To learn more about this and other ETFs, find products that match your investment goals, and read articles on the latest developments in the ETF investment universe, visit Zacks ETF Center.
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Invesco S&P 100 Equal Weight ETF (EQWL): ETF Research Reports
QUALCOMM Incorporated (QCOM): Free Stock Analysis Report
NVIDIA Corporation (NVDA): Free Stock Analysis Report
Broadcom Inc. (AVGO): Free Stock Analysis Report
SPDR S&P 500 ETF (SPY): ETF Research Reports
iShares Core S&P 500 ETF (IVV): ETF Research Reports