Should Invesco Russell 1000 Equal Weight ETF (EQAL) Be on Your Investing Radar?

Looking for broad exposure to the Large Cap Blend segment of the US equity market? You should consider 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 $371.07 M, 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

Companies that find themselves in the large cap category typically have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.

Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.

Costs

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.

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 1.54%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. 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 13.30% of the portfolio. Information Technology and Healthcare round out the top three.

Looking at individual holdings, Dominion Energy Inc (D) accounts for about 0.49% of total assets, followed by Herbalife Nutrition Ltd (HLF) and General Mills Inc (GIS).

The top 10 holdings account for about 2.77% 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 added about 5.56% so far this year and is down about -6.02% in the last one year (as of 01/10/2019). In the past 52-week period, it has traded between $26.31 and $33.62.

The ETF has a beta of 1.04 and standard deviation of 13.46% for the trailing three-year period, making it a medium risk choice in the space. With about 968 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 S&P 500 ETF (IVV) and the SPDR S&P 500 ETF (SPY) track a similar index. While iShares Core S&P 500 ETF has $154.65 B in assets, SPDR S&P 500 ETF has $247.48 B. IVV has an expense ratio of 0.04% and SPY charges 0.09%.

Bottom-Line

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

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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PWRSH-R1000 EW (EQAL): ETF Research Reports
 
Dominion Energy Inc. (D) : Free Stock Analysis Report
 
ISHARS-SP500 (IVV): ETF Research Reports
 
SPDR-SP 500 TR (SPY): ETF Research Reports
 
General Mills, Inc. (GIS) : Free Stock Analysis Report
 
Herbalife LTD. (HLF) : Free Stock Analysis Report
 
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