The Invesco S&P 500 Equal Weight ETF (RSP) made its debut on 04/24/2003, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Large Cap Blend category of the market.

What Are Smart Beta ETFs?

For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.

Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.

If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.

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.

Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.

Fund Sponsor & Index

The fund is managed by Invesco, and has been able to amass over $54.18 billion, which makes it one of the largest ETFs in the Style Box - Large Cap Blend. This particular fund, before fees and expenses, seeks to match the performance of the S&P 500 Equal Weight Index.

The S&P 500 Equal Weight Index equally weights the stocks in the S&P 500 Index.

Cost & Other Expenses

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Operating expenses on an annual basis are 0.20% for this ETF, which makes it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.59%.

Sector Exposure and Top Holdings

ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Industrials sector - about 16% of the portfolio. Financials and Information Technology round out the top three.

Looking at individual holdings, Micron Technology Inc (MU) accounts for about 0.25% of total assets, followed by Freeport-Mcmoran Inc (FCX) and Valero Energy Corp (VLO).

The top 10 holdings account for about 2.33% of total assets under management.

Performance and Risk

The ETF return is roughly 2.86% so far this year and was up about 14.96% in the last one year (as of 05/03/2024). In the past 52-week period, it has traded between $133.66 and $169.37.

The fund has a beta of 1.06 and standard deviation of 16.99% for the trailing three-year period. With about 505 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco S&P 500 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 $438.01 billion in assets, SPDR S&P 500 ETF has $500.99 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 S&P 500 Equal Weight ETF (RSP): ETF Research Reports

Freeport-McMoRan Inc. (FCX) : Free Stock Analysis Report

Micron Technology, Inc. (MU) : Free Stock Analysis Report

Valero Energy Corporation (VLO) : Free Stock Analysis Report

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

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

To read this article on Zacks.com click here.

Zacks Investment Research