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Is Invesco S&P 500 Equal Weight Health Care ETF (RYH) a Strong ETF Right Now?

Smart Beta ETF report for RYH

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This story originally appeared on Zacks

The Invesco S&P 500 Equal Weight Health Care ETF (RYH) made its debut on 11/01/2006, and is a smart beta exchange traded fund that provides broad exposure to the Health Care ETFs category of the market.

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What Are Smart Beta ETFs?

The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.

Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.

But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.

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.

The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.

Fund Sponsor & Index

The fund is managed by Invesco. RYH has been able to amass assets over $999.96 million, making it one of the larger ETFs in the Health Care ETFs. This particular fund seeks to match the performance of the S&P 500 Equal Weight Health Care Index before fees and expenses.

The S&P 500 Equal Weight Health Care Index equally weights stocks in the health care sector of the S&P 500 Index.

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.

Annual operating expenses for RYH are 0.40%, which makes it on par with most peer products in the space.

RYH's 12-month trailing dividend yield is 0.50%.

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 RYH, it has heaviest allocation in the Healthcare sector --about 100% of the portfolio.

Taking into account individual holdings, Anthem Inc (ANTM) accounts for about 1.93% of the fund's total assets, followed by Merck & Co Inc (MRK) and Centene Corp (CNC).

RYH's top 10 holdings account for about 18.11% of its total assets under management.

Performance and Risk

The ETF has gained about 0% and is up roughly 23.14% so far this year and in the past one year (as of 01/03/2022), respectively. RYH has traded between $253.50 and $321.86 during this last 52-week period.

The ETF has a beta of 0.89 and standard deviation of 21.26% for the trailing three-year period, making it a medium risk choice in the space. With about 65 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco S&P 500 Equal Weight Health Care ETF is a reasonable option for investors seeking to outperform the Health Care ETFs segment of the market. However, there are other ETFs in the space which investors could consider.

Vanguard Health Care ETF (VHT) tracks MSCI US Investable Market Health Care 25/50 Index and the Health Care Select Sector SPDR ETF (XLV) tracks Health Care Select Sector Index. Vanguard Health Care ETF has $17.50 billion in assets, Health Care Select Sector SPDR ETF has $35.77 billion. VHT has an expense ratio of 0.10% and XLV charges 0.12%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Health Care 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 Health Care ETF (RYH): ETF Research Reports

 

Merck & Co., Inc. (MRK): Free Stock Analysis Report

 

Centene Corporation (CNC): Free Stock Analysis Report

 

Health Care Select Sector SPDR ETF (XLV): ETF Research Reports

 

Vanguard Health Care ETF (VHT): ETF Research Reports

 

Anthem, Inc. (ANTM): Free Stock Analysis Report

 

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