Yahoo Finance Is Invesco S&P 500 Equal Weight Materials ETF (RTM) a Strong ETF Right Now?
Launched on 11/01/2006, the Invesco S&P 500 Equal Weight Materials ETF (RTM) is a smart beta exchange traded fund offering broad exposure to the Materials ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
RTM is managed by Invesco, and this fund has amassed over $304.78 million, which makes it one of the average sized ETFs in the Materials ETFs. Before fees and expenses, RTM seeks to match the performance of the S&P 500 Equal Weight Materials Index.
The S&P 500 Equal Weight Materials Index equally weights stocks in the materials sector of the S&P 500 Index.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.40%, making it one of the cheaper products in the space.
The fund has a 12-month trailing dividend yield of 2.42%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Materials sector - about 100% of the portfolio.
When you look at individual holdings, Newmont Corp (NEM) accounts for about 3.92% of the fund's total assets, followed by Ppg Industries Inc (PPG) and Freeport-Mcmoran Inc (FCX).
RTM's top 10 holdings account for about 36.03% of its total assets under management.
Performance and Risk
Year-to-date, the Invesco S&P 500 Equal Weight Materials ETF has lost about -6.23% so far, and is down about -16.63% over the last 12 months (as of 06/01/2023). RTM has traded between $141.04 and $185.02 in this past 52-week period.
RTM has a beta of 1.09 and standard deviation of 23.08% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 30 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco S&P 500 Equal Weight Materials ETF is a reasonable option for investors seeking to outperform the Materials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Materials Select Sector SPDR ETF (XLB) tracks Materials Select Sector Index and the FlexShares Morningstar Global Upstream Natural Resources ETF (GUNR) tracks Morningstar Global Upstream Natural Resources Index. Materials Select Sector SPDR ETF has $5.23 billion in assets, FlexShares Morningstar Global Upstream Natural Resources ETF has $6.82 billion. XLB has an expense ratio of 0.10% and GUNR charges 0.46%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Materials ETFs.
Bottom Line
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 Materials ETF (RTM): ETF Research Reports
Freeport-McMoRan Inc. (FCX) : Free Stock Analysis Report
PPG Industries, Inc. (PPG) : Free Stock Analysis Report
Newmont Corporation (NEM) : Free Stock Analysis Report
Materials Select Sector SPDR ETF (XLB): ETF Research Reports
FlexShares Morningstar Global Upstream Natural Resources ETF (GUNR): ETF Research Reports
