Is the Invesco S&P 500 Equal Weight Industrials (RGI) ETF a strong ETF right now?
A The smart beta listed index fund, the Invesco S&P 500 Equal Weight Industrials (RGI) ETF debuted on 01/11/2006 and offers broad exposure to the industrial ETF category of the market.
What are Smart Beta ETFs?
The ETF industry has long been awash with products based on market-cap-weighted indices designed to represent the entire market or a particular market segment.
Market-cap-weighted indices offer an inexpensive, convenient, and transparent way to replicate market returns and are a good option for investors who believe in market efficiency.
However, some investors believe it is possible to beat the market with excellent stock selection. this group likely invests in another class of funds known as smart beta, which tracks non-cap-weighted strategies.
Non-cap-weighted indices strive to choose stocks that have a better chance of risk-return performance, that are based on specific fundamental characteristics, or a combination of other similar characteristics.
Methodologies such as equal weighting, one of the simplest options, fundamental weighting, and volatility/momentum-based weighting are all choices available to investors in this space, but not all of them can deliver superior returns. .
Fund Sponsor and Index
RGI is managed by Invesco, and this fund has raised over $451.98 million, making it one of the mid-sized ETFs among industrial ETFs. This particular fund seeks to match the performance of the S&P 500 Equal Weight Industrials Index before fees and expenses.
The S&P 500 Equal Weight Industrials Index equally weights stocks in the industrial sector of the S&P 500 Index.
Cost and other expenses
When considering the total return of an ETF, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long run if all other factors remain equal.
The annual operating expense of this ETF is 0.40%, making it one of the cheapest products on the market.
RGI’s 12-month dividend yield is 0.74%.
Sector exposure and main holdings
Although ETFs provide diversified exposure, which minimizes single-stock risk, a thorough examination of a fund’s holdings is a valuable exercise. And most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 100% of the portfolio, the fund has the largest allocation to the industrials sector.
When looking at individual holdings, Norfolk Southern Corp (NSC) represents around 1.58% of the fund’s total assets, followed by Old Dominion Freight Line Inc (ODFL) and Csx Corp (CSX).
The top 10 holdings represent approximately 15.18% of total assets under management.
Performance and risks
So far this year, RGI has lost around -1.50% and is up around 9.45% over the past year (as of 03/30/2022). During this last 52-week period, the fund traded between $175.67 and $200.30.
RGI has a beta of 1.21 and a standard deviation of 26.31% for the three-year period, making the fund a medium-risk pick in the space. With approximately 75 holdings, it effectively diversifies company-specific risks.
The Invesco S&P 500 Equal Weight Industrials ETF is a reasonable option for investors looking to outperform the industrial ETF segment of the market. However, there are other ETFs in the space that investors might consider.
The Vanguard Industrials ETF (VIS) tracks the MSCI US Investable Market Industrials 25/50 Index and the Industrial Select Sector SPDR ETF (XLI) tracks the Industrial Select Sector Index. Vanguard Industrials ETF has $4.89 billion in assets, Industrial Select Sector SPDR ETF has $16.47 billion. VIS has a spend rate of 0.10% and XLI charges 0.10%.
Investors looking for cheaper, lower-risk options should consider traditional market-cap-weighted ETFs that aim to match the returns of industrial ETFs.
To learn more about this product and other ETFs, find products that fit your investment goals, and read articles about the latest developments in the ETF investment universe, please visit Zacks ETF Center.
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Invesco S&P 500 Equal Weight Industrials ETF (RGI): ETF Research Reports
CSX Corporation (CSX): Free Stock Analysis Report
Norfolk Southern Corporation (NSC): Free Stock Analysis Report
Old Dominion Freight Line, Inc. (ODFL): Free Inventory Analysis Report
Vanguard Industrials ETF (VIS): ETF Research Reports
ETF SPDR selected industrial sector (XLI): ETF research reports
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Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.