Designed to provide broad exposure to the Materials – Broad segment of the equity market, the Invesco S&P 500 Equal Weight Materials ETF (RTM) is a passively managed exchange traded fund launched on 11/01/2006.
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.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Materials – 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 $412.79 million, making it one of the average sized ETFs attempting to match the performance of the Materials – Broad segment of the equity market. RTM seeks to match the performance of the S&P 500 Equal Weight Materials Index before fees and expenses.
The S&P 500 Equal Weight Materials Index equally weights stocks in the materials sector of the S&P 500 Index.
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining 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 1.75%.
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 Materials sector–about 100% of the portfolio.
Looking at individual holdings, Ball Corp (BALL) accounts for about 3.95% of total assets, followed by Ppg Industries Inc (PPG) and Air Products And Chemicals Inc (APD).
The top 10 holdings account for about 37.65% of total assets under management.
Performance and Risk
The ETF has lost about -5.04% and is up roughly 1.81% so far this year and in the past one year (as of 09/13/2022), respectively. RTM has traded between $150.89 and $190.46 during this last 52-week period.
The ETF has a beta of 1.06 and standard deviation of 28.88% for the trailing three-year period, making it a medium risk choice in the space. With about 30 holdings, it has more concentrated exposure than peers.
Invesco S&P 500 Equal Weight Materials 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, RTM is a sufficient option for those seeking exposure to the Materials ETFs area of the market. Investors might also want to consider some other ETF options in the space.
Materials Select Sector SPDR ETF (XLB) tracks Materials Select Sector Index and the FlexShares Morningstar Global Upstream Natural Resources ETF (GUNR) tracks Morningstar Global Upstream Natural Resources Index. Materials Select Sector SPDR ETF has $5.75 billion in assets, FlexShares Morningstar Global Upstream Natural Resources ETF has $7.34 billion. XLB has an expense ratio of 0.10% and GUNR charges 0.46%.
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 Materials ETF (RTM): ETF Research Reports
Air Products and Chemicals, Inc. (APD) : Free Stock Analysis Report
PPG Industries, Inc. (PPG) : Free Stock Analysis Report
Materials Select Sector SPDR ETF (XLB): ETF Research Reports
FlexShares Morningstar Global Upstream Natural Resources ETF (GUNR): ETF Research Reports
Ball Corporation (BALL) : Free Stock Analysis Report
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