Making its debut on 11/01/2006, smart beta exchange traded fund Invesco S&P 500 Equal Weight Industrials ETF (RSPN) provides investors broad exposure to the Industrials ETFs category of the market.

What Are Smart Beta ETFs?

Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.

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.

There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.

This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.

While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.

Fund Sponsor & Index

RSPN is managed by Invesco, and this fund has amassed over $717.74 million, which makes it one of the average sized ETFs in the Industrials ETFs. Before fees and expenses, RSPN seeks to match the performance of the S&P 500 EQUAL WEIGHT INDUSTRIALS INDEX .

The S&P 500 Equal Weight Industrials Index equally weights stocks in the industrials sector of the S&P 500 Index.

Cost & Other Expenses

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for RSPN are 0.40%, which makes it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 0.97%.

Sector Exposure and Top Holdings

ETFs offer 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 Industrials sector - about 100% of the portfolio.

Taking into account individual holdings, 3m Co (MMM) accounts for about 1.46% of the fund's total assets, followed by Fedex Corp (FDX) and Delta Air Lines Inc (DAL).

Its top 10 holdings account for approximately 13.73% of RSPN's total assets under management.

Performance and Risk

So far this year, RSPN has gained about 9.78%, and was up about 28.26% in the last one year (as of 05/20/2024). During this past 52-week period, the fund has traded between $36.10 and $47.71.

RSPN has a beta of 1.14 and standard deviation of 18.02% for the trailing three-year period. With about 80 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco S&P 500 Equal Weight Industrials ETF is an excellent option for investors seeking to outperform the Industrials ETFs segment of the market. There are other ETFs in the space which investors could consider as well.

Vanguard Industrials ETF (VIS) tracks MSCI US Investable Market Industrials 25/50 Index and the Industrial Select Sector SPDR ETF (XLI) tracks Industrial Select Sector Index. Vanguard Industrials ETF has $5.36 billion in assets, Industrial Select Sector SPDR ETF has $18.74 billion. VIS has an expense ratio of 0.10% and XLI charges 0.09%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Industrials ETFs.

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 Industrials ETF (RSPN): ETF Research Reports

Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report

3M Company (MMM) : Free Stock Analysis Report

FedEx Corporation (FDX) : Free Stock Analysis Report

Vanguard Industrials ETF (VIS): ETF Research Reports

Industrial Select Sector SPDR ETF (XLI): ETF Research Reports

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