Should Invesco S&P Ultra Dividend Revenue ETF (RDIV) Be on Your Investing Radar?
Style Box ETF report for RDIV
The Invesco S&P Ultra Dividend Revenue ETF (RDIV) was launched on 10/01/2013, and is a passively managed exchange traded fund designed to offer broad exposure to the Large Cap Value segment of the US equity market.
The fund is sponsored by Invesco. It has amassed assets over $710.31 million, making it one of the average sized ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Large cap companies usually have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.
Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. They are however likely to underperform growth stocks in strong bull markets.
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 0.39%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 4.80%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Financials sector--about 22.50% of the portfolio. Materials and Information Technology round out the top three.
Looking at individual holdings, Phillips 66 (PSX) accounts for about 5.67% of total assets, followed by Occidental Petroleum Corp (OXY) and Pfizer Inc (PFE).
The top 10 holdings account for about 49.85% of total assets under management.
Performance and Risk
RDIV seeks to match the performance of the OFI Revenue Weighted Ultra Dividend Index before fees and expenses. The OFI Revenue Weighted Ultra Dividend Index is constructed by identifying the top 60 securities from the S&P 900 Index with the highest average of the 1-year trailing dividend yields for the current quarter and each of the past three quarters which are then re-weighted according to the revenue earned by the companies.
The ETF has added roughly 22.56% so far this year and is up about 44.89% in the last one year (as of 10/13/2021). In the past 52-week period, it has traded between $26.37 and $43.55.
The ETF has a beta of 1.29 and standard deviation of 31.47% for the trailing three-year period, making it a medium risk choice in the space. With about 60 holdings, it effectively diversifies company-specific risk.
Invesco S&P Ultra Dividend Revenue ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, RDIV is a sufficient option for those seeking exposure to the Style Box - Large Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 1000 Value ETF (IWD) and the Vanguard Value ETF (VTV) track a similar index. While iShares Russell 1000 Value ETF has $54.17 billion in assets, Vanguard Value ETF has $82.98 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
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 Ultra Dividend Revenue ETF (RDIV): ETF Research Reports
Pfizer Inc. (PFE): Free Stock Analysis Report
Occidental Petroleum Corporation (OXY): Free Stock Analysis Report
Phillips 66 (PSX): Free Stock Analysis Report
Vanguard Value ETF (VTV): ETF Research Reports
iShares Russell 1000 Value ETF (IWD): ETF Research Reports
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