A smart beta exchange traded fund, the Invesco S&P 500 Equal Weight Technology ETF (RYT) debuted on 11/01/2006, and offers extensive exposure to the Technology ETFs category of the market.
What are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes designed to represent the market or a particular market segment.
Market cap weighted indices are great for investors who believe in market efficiency. They provide an inexpensive, convenient and clear way of copying market returns.
However, some investors believe in the possibility of beating the market by exceptional stock selection, and choose a different type of fund that tracks unbalanced strategies: smart beta.
These indices try to select stocks with a better chance of risk-return performance, based on some key characteristic or combination of such characteristics.
Although this space offers many options to investors-think of one of the simplest methods like equal-weighting and more complex ones like fundamental and volatility/momentum based weighting-not everyone has delivered initial results. .
Fund and Index Sponsor
Because the fund has accumulated more than $ 2.46 billion, it makes it one of the larger ETFs in the Technology ETF. RYT is managed by Invesco. RYT, before fees and costs, aims to match the performance of the S&P 500 Equal Weight Information Technology Index.
The S&P 500 Equal Weight Information Technology Index equally weighs stocks in the information technology sector of the S&P 500 Index.
Costs and Other Costs
Cost ratios are an important factor in the return of an ETF and in the long run, cheaper funds may outperform their more expensive cousins, other things that remain the same.
Operating costs on an annual basis are 0.40% for RYT, making it one of the cheapest products in the space.
RYT’s 12-month trailing dividend yield is 0.56%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it’s still important to evaluate a fund’s holdings before investing. Most ETFs are very clear products and many disclose their holdings on a daily basis.
Representing 100% of the portfolio, the fund has the heaviest allocation in the Information Technology sector.
Looking at individual assets, Enphase Energy Inc (ENPH) is valued at approximately 1.92% of total assets, followed by Arista Networks Inc (ANET) and Salesforce.com Inc (CRM).
Its top 10 holdings account for approximately 15.52% of RYT’s total assets under management.
Performance and Risk
The ETF has lost approximately -13.01% so far this year and is up approximately 9.10% over the past one year (since 03/24/2022). Over the past 52-week period, it has traded between $ 260.03 and $ 327.55.
The ETF has a beta of 1.13 and a standard deviation of 27.61% for the next three years, making it a medium risk option in the space. With approximately 77 holdings, it effectively diversified risk specific to the company.
Alternatives
The Invesco S&P 500 Equal Weight Technology ETF is a great option for investors seeking to outperform the Technology ETFs market segment. There are other ETFs in the space that investors can also consider.
The Technology Select Sector SPDR ETF (XLK) tracks the Technology Select Sector Index and the Vanguard Information Technology ETF (VGT) tracks the MSCI US Investable Market Information Technology 25/50 Index. The Technology Select Sector SPDR ETF has $ 44.89 billion in assets, the Vanguard Information Technology ETF has $ 48.79 billion. XLK has an expense ratio of 0.10% and VGT charges 0.10%.
Investors looking for cheaper and lower risk options should consider traditional market cap weighted ETFs that aim to match Technology ETF returns.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment goals and read articles on the latest developments in the ETF investing universe, please visit the Zacks ETF Center.
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Invesco S&P 500 Equal Weight Technology ETF (RYT): ETF Research Reports
salesforce.com, inc. (CRM): Free Stock Analysis Report
Enphase Energy, Inc. (ENPH): Free Stock Analysis Report
Technology Select Sector SPDR ETF (XLK): ETF Research Reports
Arista Networks, Inc. (ANET): Free Stock Analysis Report
Vanguard Information Technology ETF (VGT): ETF Research Reports
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