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Is Invesco Russell 1000 Equal Weight ETF (EQAL) a Strong ETF Right Now?

A smart beta exchange traded fund, the Invesco Russell 1000 Equal Weight ETF (EQAL) debuted on 12/23/2014, and offers broad exposure to the Style Box - Large Cap Blend category of the market.

What Are Smart Beta ETFs?

Market cap weighted indexes 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.

A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.

There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.

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Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other 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

The fund is managed by Invesco, and has been able to amass over $541.89 million, which makes it one of the larger ETFs in the Style Box - Large Cap Blend. EQAL seeks to match the performance of the Russell 1000 Equal Weight Index before fees and expenses.

The Russell 1000 Equal Weight Index is composed of securities in the Russell 1000 Index and is equally weighted across nine sector groups with each security within the sector receiving equal weight.

Cost & Other Expenses

For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.

With on par with most peer products in the space, this ETF has annual operating expenses of 0.20%.

It's 12-month trailing dividend yield comes in at 2%.

Sector Exposure and Top Holdings

Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.

EQAL's heaviest allocation is in the Information Technology sector, which is about 13% of the portfolio. Its Industrials and Healthcare round out the top three.

Looking at individual holdings, Arista Networks Inc (ANET) accounts for about 0.51% of total assets, followed by Juniper Networks Inc (JNPR) and Roku Inc (ROKU).

The top 10 holdings account for about 4.86% of total assets under management.

Performance and Risk

The ETF has lost about -1.42% so far this year and is down about -4.19% in the last one year (as of 05/25/2023). In the past 52-week period, it has traded between $36.94 and $44.80.

The ETF has a beta of 1.11 and standard deviation of 20.09% for the trailing three-year period, making it a medium risk choice in the space. With about 995 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco Russell 1000 Equal Weight ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.

IShares Core S&P 500 ETF (IVV) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY) tracks S&P 500 Index. IShares Core S&P 500 ETF has $306.51 billion in assets, SPDR S&P 500 ETF has $384.86 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Blend.

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.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Invesco Russell 1000 Equal Weight ETF (EQAL): ETF Research Reports

Juniper Networks, Inc. (JNPR) : Free Stock Analysis Report

SPDR S&P 500 ETF (SPY): ETF Research Reports

Arista Networks, Inc. (ANET) : Free Stock Analysis Report

iShares Core S&P 500 ETF (IVV): ETF Research Reports

Roku, Inc. (ROKU) : Free Stock Analysis Report

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Zacks Investment Research