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Should You Invest in the Invesco S&P 500 Equal Weight Materials ETF (RTM)?

Sector ETF report for RTM

By
This story originally appeared on Zacks

If you're interested in broad exposure to the Materials - Broad segment of the equity market, look no further than the Invesco S&P 500 Equal Weight Materials ETF (RTM), a passively managed exchange traded fund launched on 11/01/2006.

- Zacks

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Materials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 6, placing it in top 38%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $479.01 million, making it one of the average sized ETFs attempting to match the performance of the Materials - Broad segment of the equity market. RTM seeks to match the performance of the S&P 500 Equal Weight Materials Index before fees and expenses.

The S&P 500 Equal Weight Materials Index equally weights stocks in the materials sector of the S&P 500 Index.

Costs

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

Annual operating expenses for this ETF are 0.40%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.43%.

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 in the Materials sector--about 100% of the portfolio.

Looking at individual holdings, Mosaic Co/the (MOS) accounts for about 4.59% of total assets, followed by Cf Industries Holdings Inc (CF) and Air Products And Chemicals Inc (APD).

The top 10 holdings account for about 38.85% of total assets under management.

Performance and Risk

The ETF has added about 1.33% and it's up approximately 29.83% so far this year and in the past one year (as of 01/06/2022), respectively. RTM has traded between $137.89 and $180.89 during this last 52-week period.

The ETF has a beta of 1.10 and standard deviation of 27.66% for the trailing three-year period, making it a medium risk choice in the space. With about 29 holdings, it has more concentrated exposure than peers.

Alternatives

Invesco S&P 500 Equal Weight Materials ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, RTM is an excellent option for investors seeking exposure to the Materials ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.

FlexShares Morningstar Global Upstream Natural Resources ETF (GUNR) tracks Morningstar Global Upstream Natural Resources Index and the Materials Select Sector SPDR ETF (XLB) tracks Materials Select Sector Index. FlexShares Morningstar Global Upstream Natural Resources ETF has $6.66 billion in assets, Materials Select Sector SPDR ETF has $8.22 billion. GUNR has an expense ratio of 0.46% and XLB charges 0.12%.

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 Materials ETF (RTM): ETF Research Reports

 

Air Products and Chemicals, Inc. (APD): Free Stock Analysis Report

 

CF Industries Holdings, Inc. (CF): Free Stock Analysis Report

 

The Mosaic Company (MOS): Free Stock Analysis Report

 

Materials Select Sector SPDR ETF (XLB): ETF Research Reports

 

FlexShares Morningstar Global Upstream Natural Resources ETF (GUNR): ETF Research Reports

 

To read this article on Zacks.com click here.

 

Zacks Investment Research