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Is Invesco S&P 500 Equal Weight Consumer Discretionary ETF (RSPD) a Strong ETF Right Now?

Zacks Equity Research
·4-min read

Designed to provide broad exposure to the Consumer Discretionary ETFs category of the market, the Invesco S&P 500 Equal Weight Consumer Discretionary ETF (RSPD) is a smart beta exchange traded fund launched on 11/01/2006.

What Are Smart Beta ETFs?

The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.

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

But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.

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Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.

Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.

Fund Sponsor & Index

The fund is managed by Invesco. RSPD has been able to amass assets over $389.68 million, making it one of the larger ETFs in the Consumer Discretionary ETFs. RSPD, before fees and expenses, seeks to match the performance of the S&P 500 EQL WEIGHT CONS DISCRETIONARY ID.

The S&P 500 Equal Weight Consumer Discretionary Index equally weights stocks in the consumer discretionary sector of the S&P 500 Index.

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.

Operating expenses on an annual basis are 0.40% for RSPD, making it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 1.06%.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Consumer Discretionary sector - about 100% of the portfolio.

Looking at individual holdings, General Motors Co (GM) accounts for about 2.17% of total assets, followed by Domino's Pizza Inc (DPZ) and Mgm Resorts International (MGM).

Its top 10 holdings account for approximately 20.74% of RSPD's total assets under management.

Performance and Risk

Year-to-date, the Invesco S&P 500 Equal Weight Consumer Discretionary ETF has added about 1.21% so far, and was up about 13.65% over the last 12 months (as of 05/13/2024). RSPD has traded between $38.50 and $51.02 in this past 52-week period.

The fund has a beta of 1.40 and standard deviation of 23.09% for the trailing three-year period. With about 54 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco S&P 500 Equal Weight Consumer Discretionary ETF is a reasonable option for investors seeking to outperform the Consumer Discretionary ETFs segment of the market. However, there are other ETFs in the space which investors could consider.

Vanguard Consumer Discretionary ETF (VCR) tracks MSCI US Investable Market Consumer Discretionary 25/50 Index and the Consumer Discretionary Select Sector SPDR ETF (XLY) tracks Consumer Discretionary Select Sector Index. Vanguard Consumer Discretionary ETF has $5.50 billion in assets, Consumer Discretionary Select Sector SPDR ETF has $19.15 billion. VCR has an expense ratio of 0.10% and XLY 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 Consumer Discretionary 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.

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 Consumer Discretionary ETF (RSPD): ETF Research Reports

Domino's Pizza Inc (DPZ) : Free Stock Analysis Report

MGM Resorts International (MGM) : Free Stock Analysis Report

General Motors Company (GM) : Free Stock Analysis Report

Consumer Discretionary Select Sector SPDR ETF (XLY): ETF Research Reports

Vanguard Consumer Discretionary ETF (VCR): ETF Research Reports

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Zacks Investment Research