Should Invesco Russell 1000 Equal Weight ETF Be on Your Investing Radar?

Designed to provide broad exposure to the Large Cap Blend segment of the US equity market, the Invesco Russell 1000 Equal Weight ETF EQAL is a passively managed exchange traded fund launched on 12/23/2014.

The fund is sponsored by Invesco. It has amassed assets over $609.44 million, making it one of the average sized ETFs attempting to match the Large Cap Blend segment of the US equity market.

Why Large Cap Blend

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.

Blend ETFs are aptly named, since they tend to hold a mix of growth and value stocks, as well as show characteristics of both kinds of equities.

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 0.20%, putting it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.67%.

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.

This ETF has heaviest allocation to the Information Technology sector--about 12.20% of the portfolio. Financials and Real Estate round out the top three.

Looking at individual holdings, Charter Communications Inc CHTR accounts for about 0.69% of total assets, followed by Liberty Broadband Corp LBRDK and Ubiquiti Inc UI.

The top 10 holdings account for about 6.03% of total assets under management.

Performance and Risk

EQAL seeks to match the performance of the Russell 1000 Equal Weight Index before fees and expenses. The Russell 1000 Equal Weight Index is composed of securities in the Russell 1000 Index and is equally weighted across nine sector groups with each security within the sector receiving equal weight.

The ETF has added about 9.20% so far this year and it's up approximately 16.71% in the last one year (as of 09/17/2024). In the past 52-week period, it has traded between $37.43 and $47.80.

The ETF has a beta of 1.10 and standard deviation of 18.24% for the trailing three-year period, making it a medium risk choice in the space. With about 997 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco Russell 1000 Equal Weight 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, EQAL is a reasonable option for those seeking exposure to the Style Box - Large Cap Blend area of the market. Investors might also want to consider some other ETF options in the space.

The iShares Core S&P 500 ETF IVV and the SPDR S&P 500 ETF track a similar index. While iShares Core S&P 500 ETF has $521.05 billion in assets, SPDR S&P 500 ETF has $555.26 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.

Bottom-Line

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

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