Should Invesco S&P 500 Equal Weight ETF (RSP) Be on Your Investing Radar?

Designed to provide broad exposure to the Large Cap Blend segment of the US equity market, the Invesco S&P 500 Equal Weight ETF (RSP) is a passively managed exchange traded fund launched on 04/24/2003.

The fund is sponsored by Invesco. It has amassed assets over $28.26 billion, making it one of the largest ETFs attempting to match the Large Cap Blend segment of the US equity market.

Why Large Cap Blend

Large cap companies usually have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.

Typically holding a combination of both growth and value stocks, blend ETFs also demonstrate qualities seen in value and growth investments.

Costs

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.

Annual operating expenses for this ETF are 0.20%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.87%.

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 to the Information Technology sector--about 15.10% of the portfolio. Industrials and Financials round out the top three.

Looking at individual holdings, Epam Systems Inc (EPAM) accounts for about 0.27% of total assets, followed by Enphase Energy Inc (ENPH) and Etsy Inc (ETSY).

The top 10 holdings account for about 2.54% of total assets under management.

Performance and Risk

RSP seeks to match the performance of the S&P 500 Equal Weight Index before fees and expenses. The S&P 500 Equal Weight Index equally weights the stocks in the S&P 500 Index.

The ETF has lost about -18.46% so far this year and is down about -12.23% in the last one year (as of 10/04/2022). In the past 52-week period, it has traded between $127.28 and $164.20.

The ETF has a beta of 1.06 and standard deviation of 25.87% for the trailing three-year period. With about 504 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco S&P 500 Equal Weight ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, RSP is a sufficient option for those seeking exposure to the Style Box - Large Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.

The iShares Core S&P 500 ETF (IVV) and the SPDR S&P 500 ETF (SPY) track a similar index. While iShares Core S&P 500 ETF has $275.37 billion in assets, SPDR S&P 500 ETF has $333.93 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.

Bottom-Line

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.

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 ETF (RSP): ETF Research Reports
 
EPAM Systems, Inc. (EPAM) : Free Stock Analysis Report
 
SPDR S&P 500 ETF (SPY): ETF Research Reports
 
Enphase Energy, Inc. (ENPH) : Free Stock Analysis Report
 
Etsy, Inc. (ETSY) : Free Stock Analysis Report
 
iShares Core S&P 500 ETF (IVV): ETF Research Reports
 
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