Is Invesco S&P 500 Equal Weight Health Care ETF (RSPH) a Strong ETF Right Now?
A smart beta exchange traded fund, the Invesco S&P 500 Equal Weight Health Care ETF (RSPH) debuted on 11/01/2006, and offers broad exposure to the Health Care ETFs category of the market.
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.
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.
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.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is sponsored by Invesco. It has amassed assets over $941.65 million, making it one of the larger ETFs in the Health Care ETFs. This particular fund seeks to match the performance of the S&P 500 EQUAL WEIGHT HEALTH CARE INDEX before fees and expenses.
The S&P 500 Equal Weight Health Care Index equally weights stocks in the health care 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.
Operating expenses on an annual basis are 0.40% for RSPH, making it one of the cheaper products in the space.
RSPH's 12-month trailing dividend yield is 0.63%.
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.
For RSPH, it has heaviest allocation in the Healthcare sector --about 100% of the portfolio.
When you look at individual holdings, Universal Health Services Inc (UHS) accounts for about 1.88% of the fund's total assets, followed by Bristol-Myers Squibb Co (BMY) and Gilead Sciences Inc (GILD).
The top 10 holdings account for about 17.85% of total assets under management.
Performance and Risk
The ETF has added roughly 7.53% so far this year and is up about 17.05% in the last one year (as of 10/02/2024). In the past 52-week period, it has traded between $25.30 and $32.53.
RSPH has a beta of 0.84 and standard deviation of 16.25% for the trailing three-year period. With about 65 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco S&P 500 Equal Weight Health Care ETF is a reasonable option for investors seeking to outperform the Health Care ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Health Care ETF (VHT) tracks MSCI US Investable Market Health Care 25/50 Index and the Health Care Select Sector SPDR ETF (XLV) tracks Health Care Select Sector Index. Vanguard Health Care ETF has $18.51 billion in assets, Health Care Select Sector SPDR ETF has $41.77 billion. VHT has an expense ratio of 0.10% and XLV 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 Health Care 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 Health Care ETF (RSPH): ETF Research Reports
Bristol Myers Squibb Company (BMY) : Free Stock Analysis Report
Gilead Sciences, Inc. (GILD) : Free Stock Analysis Report
Universal Health Services, Inc. (UHS) : Free Stock Analysis Report
Health Care Select Sector SPDR ETF (XLV): ETF Research Reports
Vanguard Health Care ETF (VHT): ETF Research Reports