Yahoo Finance Is Invesco Russell 1000 Equal Weight ETF (EQAL) a Strong ETF Right Now?
The Invesco Russell 1000 Equal Weight ETF (EQAL) was launched on 12/23/2014, and is a smart beta exchange traded fund designed to offer broad exposure to the Style Box - Large Cap Blend category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
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.
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
Because the fund has amassed over $586.62 million, this makes it one of the average sized ETFs in the Style Box - Large Cap Blend. EQAL is managed by Invesco. This particular fund, before fees and expenses, seeks to match the performance of the Russell 1000 Equal Weight Index.
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
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.
Annual operating expenses for this ETF are 0.20%, making it on par with most peer products in the space.
EQAL's 12-month trailing dividend yield is 1.83%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
For EQAL, it has heaviest allocation in the Information Technology sector --about 12.20% of the portfolio --while Industrials and Financials round out the top three.
Taking into account individual holdings, Verizon Communications Inc (VZ) accounts for about 0.57% of the fund's total assets, followed by Motorola Solutions Inc (MSI) and At&t Inc (T).
EQAL's top 10 holdings account for about 5.37% of its total assets under management.
Performance and Risk
So far this year, EQAL has added about 1.96%, and is up roughly 11% in the last one year (as of 06/10/2024). During this past 52-week period, the fund has traded between $37.43 and $46.19.
The fund has a beta of 1.11 and standard deviation of 18.15% for the trailing three-year period, which makes EQAL a medium risk choice in this particular space. With about 994 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 $469.53 billion in assets, SPDR S&P 500 ETF has $537.23 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.
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Invesco Russell 1000 Equal Weight ETF (EQAL): ETF Research Reports
AT&T Inc. (T) : Free Stock Analysis Report
Verizon Communications Inc. (VZ) : Free Stock Analysis Report
Motorola Solutions, Inc. (MSI) : Free Stock Analysis Report
SPDR S&P 500 ETF (SPY): ETF Research Reports
iShares Core S&P 500 ETF (IVV): ETF Research Reports
