Designed to provide broad exposure to the Financials ETFs category of the market, the Invesco S&P 500 Equal Weight Financials ETF (RYF) is a smart beta exchange traded fund launched on 11/01/2006.What Are Smart Beta ETFs?For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies–popularly known as smart beta.These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.Fund Sponsor & IndexThe fund is sponsored by Invesco. It has amassed assets over $496.94 million, making it one of the average sized ETFs in the Financials ETFs. RYF, before fees and expenses, seeks to match the performance of the S&P 500 Equal Weight Financials Index.The S&P 500 Equal Weight Financials Index equally weights stocks in the financial sector of the S&P 500 Index.Cost & Other ExpensesWhen considering an ETF’s total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.Annual operating expenses for RYF are 0.40%, which makes it on par with most peer products in the space.It’s 12-month trailing dividend yield comes in at 1.56%.Sector Exposure and Top HoldingsMost ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it’s still important for investors to research a fund’s holdings.Representing 100% of the portfolio, the fund has heaviest allocation to the Financials sector.Looking at individual holdings, Regions Financial Corp (RF) accounts for about 1.75% of total assets, followed by Svb Financial Group (SIVB) and Bank Of America Corp (BAC).Its top 10 holdings account for approximately 16.93% of RYF’s total assets under management.Performance and RiskSo far this year, RYF has added about 0%, and was up about 36.17% in the last one year (as of 01/03/2022). During this past 52-week period, the fund has traded between $47.31 and $66.59.The ETF has a beta of 1.20 and standard deviation of 30.76% for the trailing three-year period, making it a medium risk choice in the space. With about 66 holdings, it effectively diversifies company-specific risk.AlternativesInvesco S&P 500 Equal Weight Financials ETF is a reasonable option for investors seeking to outperform the Financials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.Vanguard Financials ETF (VFH) tracks MSCI US Investable Market Financials 25/50 Index and the Financial Select Sector SPDR ETF (XLF) tracks Financial Select Sector Index. Vanguard Financials ETF has $11.60 billion in assets, Financial Select Sector SPDR ETF has $44.33 billion. VFH has an expense ratio of 0.10% and XLF charges 0.12%.Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Financials ETFs.Bottom LineTo 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.Want key ETF info delivered straight to your inbox? Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Invesco S&P 500 Equal Weight Financials ETF (RYF): ETF Research Reports Bank of America Corporation (BAC): Free Stock Analysis Report Regions Financial Corporation (RF): Free Stock Analysis Report SVB Financial Group (SIVB): Free Stock Analysis Report Financial Select Sector SPDR ETF (XLF): ETF Research Reports Vanguard Financials ETF (VFH): ETF Research Reports To read this article on click here. Zacks Investment Research
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