ETFs
Is the Invesco S&P 500 Equal Weight Energy ETF (RSPG) a strong ETF right now?
Launched on 11/01/2006, the Smart Beta Invesco S&P 500 Equal Weight Energy ETF (RSPG) exchange-traded fund offers investors broad exposure to the energy ETF category of the market.
What are Smart Beta ETFs?
Market-cap-weighted index-based products, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
A good option for investors who believe in market efficiency, market-cap-weighted indices offer a low-cost, convenient and transparent way to replicate market returns.
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.
This type of index follows the same mindset, as it attempts to select stocks that have a better chance of risk-return performance; non-market-cap-weighted strategies base selection on certain fundamental characteristics, or a combination of these characteristics.
This field offers many different investment choices, such as the simplest methodologies of equal weighting, fundamental weighting, and volatility/momentum weighting; however, not all of these strategies can yield the best results.
Fund and Index Sponsor
The fund is sponsored by Invesco. It has accumulated assets of over $573.48 million, making it one of the largest ETFs in the energy sector. RSPG, before fees and expenses, seeks to match the performance of the S&P 500 EQUAL WEIGHT ENERGY PLUS Index.
The S&P 500 Equal Weight Energy Plus Index equally weights stocks in the energy sector of the S&P 500 Index.
Costs and other expenses
Cost is a big factor in choosing the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
The annual operating expenses of this ETF are 0.40%, making it one of the cheapest products in the sector.
The fund has a 12-month rolling dividend yield of 2.50%.
Sector exposure and main holdings
Most ETFs are highly transparent products and disclose their assets daily. ETFs also offer diversified exposure, which minimizes the risk associated with a single stock, although it is still important for investors to research a fund’s assets.
Representing 100% of the portfolio, the fund has the highest allocation to the energy sector.
Taking into account individual holdings, Targa Resources Corp (TRGP) represents approximately 5.34% of the fund’s total assets, followed by Williams Cos Inc/the (WMB) and Kinder Morgan Inc (KMI).
RSPG’s top 10 holdings represent approximately 48.19% of its total assets under management.
The story continues
Performance and risk
The ETF has gained about 10.10% and is up about 15.56% so far this year and over the past year (as of 12/07/2024), respectively. RSPG has traded between $69.70 and $86.08 over the past 52-week period.
RSPG has a beta of 1.43 and a standard deviation of 18.11% over the last three years. With around 23 holdings, its exposure is more concentrated than that of its peers.
Alternatives
The Invesco S&P 500 Equal Weight Energy ETF is a great option for investors looking to outperform the energy ETF segment of the market. There are other ETFs in this sector that investors might also want to consider.
The Vanguard Energy ETF (VDE) tracks the MSCI US Investable Market Energy 25/50 Index and the Energy Select Sector SPDR ETF (XLE) tracks the Energy Select Sector Index. The Vanguard Energy ETF has $8.46 billion in assets, the Energy Select Sector SPDR ETF has $37.70 billion. The VDE has an expense ratio of 0.10% and the XLE charges 0.09%.
Investors looking for cheaper, less risky options should consider traditional market-cap-weighted ETFs that aim to match the returns of energy ETFs.
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 500 Equal Weight Energy ETF (RSPG): ETF Research Reports
Williams Companies, Inc. (The) (WMB) : Free Stock Analysis Report
Kinder Morgan, Inc. (KMI) : Free Stock Analysis Report
ETF Energy Select Sector SPDR (XLE): ETF Research Reports
Targa Resources, Inc. (TRGP) : Free Stock Analysis Report
Vanguard Energy ETF (VDE): ETF Research Reports