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Should You Invest in the Invesco S&P 500 Equal Weight Financials ETF (RYF)?

Zacks Equity Research

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

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Financials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 6, placing it in top 38%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $202.46 M, making it one of the average sized ETFs attempting to match the performance of the Financials - Broad segment of the equity market. RYF seeks to match the performance of the S&P 500 Equal Weight Financials Index before fees and expenses.

The S&P 500 Equal Weight Financials Index is an unmanaged equal weighted version of the S&P 500 Financials Index that consists of the common stocks of the following industries: banks, diversified financials, brokerage, asset manage-ment insurance and real estate, including investment trusts that comprise the Financials sector 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 on par with most peer products in the space.

It has a 12-month trailing dividend yield of 2.47%.

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 Financials sector--about 100% of the portfolio.

Looking at individual holdings, Msci Inc (MSCI) accounts for about 2% of total assets, followed by Moody's Corp (MCO) and Arthur J Gallagher & Co (AJG).

The top 10 holdings account for about 17.81% of total assets under management.

Performance and Risk

Year-to-date, the Invesco S&P 500 Equal Weight Financials ETF has lost about -24.88% so far, and is down about -11.44% over the last 12 months (as of 03/10/2020). RYF has traded between $35.21 and $48.11 in this past 52-week period.

The ETF has a beta of 1.16 and standard deviation of 16.82% 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.

Alternatives

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

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 $5.95 B in assets, Financial Select Sector SPDR ETF has $16.85 B. VFH has an expense ratio of 0.10% and XLF charges 0.13%.

Bottom Line

To 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.


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Invesco S&P 500 Equal Weight Financials ETF (RYF): ETF Research Reports
 
Moody's Corporation (MCO) : Free Stock Analysis Report
 
Financial Select Sector SPDR ETF (XLF): ETF Research Reports
 
Arthur J. Gallagher & Co. (AJG) : Free Stock Analysis Report
 
MSCI Inc (MSCI) : Free Stock Analysis Report
 
Vanguard Financials ETF (VFH): ETF Research Reports
 
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