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

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

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds 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. Utilities - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 2, placing it in top 13%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $266.75 million, making it one of the average sized ETFs attempting to match the performance of the Utilities - Broad segment of the equity market. RSPU seeks to match the performance of the SP 500 EQUAL WEIGHT TELECM-UTILITY INDEX before fees and expenses.

The S&P 500 Equal Weight Telecommunication Services & Utilities Index equally weights stocks found in the utilities and telecommunication services sectors 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 one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 2.79%.

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 Utilities sector--about 100% of the portfolio.

Looking at individual holdings, NRG Energy Inc NRG accounts for about 4% of total assets, followed by Constellation Energy Corp CEG and NextEra Energy Inc NEE.

The top 10 holdings account for about 35.48% of total assets under management.

Performance and Risk

So far this year, RSPU return is roughly 7.80%, and is up about 6.02% in the last one year (as of 07/08/2024). During this past 52-week period, the fund has traded between $48.19 and $61.82.

The ETF has a beta of 0.62 and standard deviation of 17.67% for the trailing three-year period. With about 33 holdings, it has more concentrated exposure than peers.

Alternatives

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

Vanguard Utilities ETF VPU tracks MSCI US Investable Market Utilities 25/50 Index and the Utilities Select Sector SPDR ETF XLU tracks Utilities Select Sector Index. Vanguard Utilities ETF has $5.49 billion in assets, Utilities Select Sector SPDR ETF has $13.91 billion. VPU has an expense ratio of 0.10% and XLU charges 0.09%.

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