Yahoo Finance Is Invesco S&P 500 Equal Weight Technology ETF (RYT) a Strong ETF Right Now?
A smart beta exchange traded fund, the Invesco S&P 500 Equal Weight Technology ETF (RYT) debuted on 11/01/2006, and offers broad exposure to the Technology ETFs 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.
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.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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 $2.40 billion, making it one of the larger ETFs in the Technology ETFs. RYT, before fees and expenses, seeks to match the performance of the S&P 500 Equal Weight Information Technology Index.
The S&P 500 Equal Weight Information Technology Index equally weights stocks in the information technology sector of the S&P 500 Index.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.40%, making it one of the cheaper products in the space.
The fund has a 12-month trailing dividend yield of 0.63%.
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.
RYT's heaviest allocation is in the Information Technology sector, which is about 100% of the portfolio.
When you look at individual holdings, First Solar Inc (FSLR) accounts for about 1.42% of the fund's total assets, followed by Verisign Inc (VRSN) and Ptc Inc (PTC).
The top 10 holdings account for about 12.37% of total assets under management.
Performance and Risk
So far this year, RYT has added roughly 13.10%, and is down about -6.47% in the last one year (as of 02/02/2023). During this past 52-week period, the fund has traded between $220.06 and $303.27.
The fund has a beta of 1.17 and standard deviation of 30.91% for the trailing three-year period, which makes RYT a medium risk choice in this particular space. With about 78 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco S&P 500 Equal Weight Technology ETF is an excellent option for investors seeking to outperform the Technology ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
Technology Select Sector SPDR ETF (XLK) tracks Technology Select Sector Index and the Vanguard Information Technology ETF (VGT) tracks MSCI US Investable Market Information Technology 25/50 Index. Technology Select Sector SPDR ETF has $41.77 billion in assets, Vanguard Information Technology ETF has $44.30 billion. XLK has an expense ratio of 0.10% and VGT charges 0.10%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Technology 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 Technology ETF (RYT): ETF Research Reports
First Solar, Inc. (FSLR) : Free Stock Analysis Report
VeriSign, Inc. (VRSN) : Free Stock Analysis Report
Technology Select Sector SPDR ETF (XLK): ETF Research Reports
PTC Inc. (PTC) : Free Stock Analysis Report
Vanguard Information Technology ETF (VGT): ETF Research Reports
