Is Invesco Russell 1000 Equal Weight ETF (EQAL) a Strong ETF Right Now?
Smart Beta ETF report for EQAL
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?
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.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
Because the fund has amassed over $676.14 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 seeks to match the performance of the Russell 1000 Equal Weight Index before fees and expenses.
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
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 0.20% for EQAL, making it one of the cheaper products in the space.
It's 12-month trailing dividend yield comes in at 1.46%.
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.
EQAL's heaviest allocation is in the Information Technology sector, which is about 14.80% of the portfolio. Its Industrials and Healthcare round out the top three.
Taking into account individual holdings, Roku Inc (ROKU) accounts for about 0.56% of the fund's total assets, followed by Liberty Broadband Corp (LBRDK) and Cable One Inc (CABO).
EQAL's top 10 holdings account for about 4.78% of its total assets under management.
Performance and Risk
So far this year, EQAL has added about 21.99%, and it's up approximately 40.21% in the last one year (as of 09/02/2021). During this past 52-week period, the fund has traded between $31.22 and $46.48.
The fund has a beta of 1.19 and standard deviation of 24.70% for the trailing three-year period, which makes EQAL a medium risk choice in this particular space. With about 1012 holdings, it effectively diversifies company-specific risk.
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 $305.45 billion in assets, SPDR S&P 500 ETF has $397.24 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.
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
SPDR S&P 500 ETF (SPY): ETF Research Reports
Cable One, Inc. (CABO): Free Stock Analysis Report
Liberty Broadband Corporation (LBRDK): Free Stock Analysis Report
iShares Core S&P 500 ETF (IVV): ETF Research Reports
Roku, Inc. (ROKU): Free Stock Analysis Report
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