If you're interested in broad exposure to the Utilities - Broad segment of the equity market, look no further than the Invesco S&P 500 Equal Weight Utilities ETF (RYU), a passively managed exchange traded fund launched on 11/01/2006.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Utilities - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 10, placing it in bottom 38%.
The fund is sponsored by Invesco. It has amassed assets over $214.64 million, making it one of the average sized ETFs attempting to match the performance of the Utilities - Broad segment of the equity market. RYU seeks to match the performance of the S&P 500 Equal Weight Telecommunication Services & Utilities Index before fees and expenses.
This index is an unmanaged equal weighted version of the S&P 500 Utilities Index that consists of common stocks of the following industries: electric utilities, gas utilities, multi-utilities & unregulated power & water utilities,telecommunication service companies, including fixed-line, cellular, wireless, high bandwidth & fiber-optic cable networks.
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 this ETF are 0.40%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 2.53%.
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 in the Utilities sector--about 100% of the portfolio.
Looking at individual holdings, Edison International (EIX) accounts for about 3.96% of total assets, followed by Exelon Corp (EXC) and Aes Corp/the (AES).
The top 10 holdings account for about 37.50% of total assets under management.
Performance and Risk
The ETF has added about 15.30% and is up roughly 14.80% so far this year and in the past one year (as of 12/15/2021), respectively. RYU has traded between $93.39 and $112.58 during this last 52-week period.
The ETF has a beta of 0.45 and standard deviation of 25.19% for the trailing three-year period, making it a medium risk choice in the space. With about 29 holdings, it has more concentrated exposure than peers.
Invesco S&P 500 Equal Weight Utilities 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, RYU is a reasonable option for those seeking exposure to the Utilities/Infrastructure ETFs area of the market. Investors might also want to consider some other ETF options in the space.
Vanguard Utilities ETF (VPU) tracks MSCI US Investable Market Utilities 25/50 Index and the Utilities Select Sector SPDR ETF (XLU) tracks Utilities Select Sector Index. Vanguard Utilities ETF has $5.26 billion in assets, Utilities Select Sector SPDR ETF has $13.05 billion. VPU has an expense ratio of 0.10% and XLU charges 0.12%.
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 Utilities ETF (RYU): ETF Research Reports
Exelon Corporation (EXC) : Free Stock Analysis Report
Edison International (EIX) : Free Stock Analysis Report
The AES Corporation (AES) : Free Stock Analysis Report
Utilities Select Sector SPDR ETF (XLU): ETF Research Reports
Vanguard Utilities ETF (VPU): ETF Research Reports
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