If you’re interested in broad exposure to the Large Cap Blend segment of the US equity market, look no further than the Invesco Russell 1000 Equal Weight ETF (EQAL), a passively managed exchange traded fund launched on 12/23/2014.
The fund is sponsored by Invesco. It has amassed assets over $431.89 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. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.
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 1.98%.
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 Industrials sector–about 13.90% of the portfolio. Information Technology and Healthcare round out the top three.
Looking at individual holdings, Premier Us Government Money Portfolio (IUGXX) accounts for about 0.48% of total assets, followed by Enphase Energy Inc (ENPH) and Pioneer Natural Resources Co (PXD).
The top 10 holdings account for about 3% 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 lost about -1.09% so far this year and was up about 7.98% in the last one year (as of 08/14/2020). In the past 52-week period, it has traded between $20.58 and $34.82.
The ETF has a beta of 1.20 and standard deviation of 23.69% for the trailing three-year period, making it a medium risk choice in the space. With about 993 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 sufficient 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 SP 500 ETF (IVV) and the SPDR SP 500 ETF (SPY) track a similar index. While iShares Core SP 500 ETF has $213.10 billion in assets, SPDR SP 500 ETF has $300.16 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.
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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