Should You Invest in the Invesco S&P 500 Equal Weight Health Care ETF?

Designed to provide broad exposure to the Healthcare - Broad segment of the equity market, the Invesco S&P 500 Equal Weight Health Care ETF RSPH is a passively managed exchange traded fund launched on 11/01/2006.

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.

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. Healthcare - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 4, placing it in top 25%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $953.37 million, making it one of the larger ETFs attempting to match the performance of the Healthcare - Broad segment of the equity market. RSPH 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.

Costs

Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.

Annual operating expenses for this ETF are 0.40%, making it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 0.61%.

Sector Exposure and Top Holdings

ETFs offer a 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.

This ETF has heaviest allocation in the Healthcare sector--about 100% of the portfolio.

Looking at individual holdings, Bio-Rad Laboratories Inc BIO accounts for about 1.82% of total assets, followed by Bristol-Myers Squibb Co BMY and Gilead Sciences Inc GILD.

The top 10 holdings account for about 17.87% of total assets under management.

Performance and Risk

So far this year, RSPH has gained about 7.38%, and is up about 12.94% in the last one year (as of 09/12/2024). During this past 52-week period, the fund has traded between $25.30 and $32.39.

The ETF has a beta of 0.84 and standard deviation of 16.29% for the trailing three-year period. With about 65 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco S&P 500 Equal Weight Health Care 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, RSPH is a sufficient option for those seeking exposure to the Health Care ETFs area of the market. Investors might also want to consider some other ETF options in the space.

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 $18.69 billion in assets, Health Care Select Sector SPDR ETF has $41.93 billion. VHT has an expense ratio of 0.10% and XLV charges 0.09%.

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