ETFs
Should You Invest in the Invesco S&P 500 Equal Weight Materials ETF (RSPM)?
If you are interested in broad exposure to the Materials – Large segment of the equity market, look no further than the Invesco S&P 500 Equal Weight Materials ETF (RSPM), a passively managed exchange-traded fund launched on 11/01/2006.
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.
Sector ETFs also allow investors to access a broad group of companies in specific industries that offer low risk and diversified exposure. Materials – Broad is one of 16 broad sectors in the Zacks Industry Rank. It is currently ranked #9, which puts it in the bottom 44%.
Index details
The fund is sponsored by Invesco. It has accumulated assets of over $267.38 million, making it one of the mid-cap ETFs that seek to match the performance of the Materials – Broad segment of the equity market. RSPM seeks to match the performance of the S&P 500 EQUAL WEIGHT MATERIALS INDEX before fees and expenses.
The S&P 500 Equal Weight Materials Index equally weights stocks in the materials sector of the S&P 500 Index.
Costs
When considering an ETF’s total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts over the long term if all other factors remain equal.
The annual operating expenses of this ETF are 0.40%, making it one of the cheapest products in the sector.
Its 12-month rolling dividend yield is 2%.
Sector exposure and main holdings
While ETFs offer diversified exposure that minimizes the risk associated with any one stock, investors should also look at the fund’s actual holdings. Fortunately, most ETFs are highly transparent products that disclose their holdings daily.
This ETF has the highest allocation to the materials sector, approximately 100% of the portfolio.
Looking at individual holdings, International Paper Co (IP) accounts for about 4.51% of total assets, followed by Newmont Corp (NEM) and International Flavors & Fragrances Inc (IFF).
The top 10 stocks represent approximately 40.81% of total assets under management.
Performance and risk
The ETF has gained about 1.32% year to date and is up about 6.95% over the past year (as of 7/10/2024). During that 52-week period, it has traded between $28.92 and $36.50.
The ETF has a beta of 1.10 and a standard deviation of 20.01% over the past three years. With about 29 stocks, it has more concentrated exposure than its peers.
Alternatives
The Invesco S&P 500 Equal Weight Materials ETF is rated 3 (Hold) by Zacks, based on the asset class’s expected return, expense ratio and momentum, among other factors. Thus, RSPM is a sufficient option for those seeking exposure to the materials ETF sector. Investors may also want to consider other ETF options in this space.
The story continues
The Materials Select Sector SPDR ETF (XLB) tracks the Materials Select Sector Index and the FlexShares Morningstar Global Upstream Natural Resources ETF (GUNR) tracks the Morningstar Global Upstream Natural Resources Index. The Materials Select Sector SPDR ETF has $5.39 billion in assets, the FlexShares Morningstar Global Upstream Natural Resources ETF has $5.82 billion. The XLB has an expense ratio of 0.09% and the GUNR charges 0.46%.
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 Materials ETF (RSPM): ETF Research Reports
International Paper Company (IP): Free Stock Analysis Report
International Flavors & Fragrances Inc. (IFF): Free Stock Analysis Report
Newmont Corporation (NEM): Free Stock Analysis Report
Materials Select Sector SPDR ETF (XLB): ETF Research Reports
Morningstar Global Upstream Natural Resources FlexShares ETF (GUNR): ETF Research Reports