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Is Invesco S&P 500 Equal Weight Health Care ETF (RYH) a Strong ETF Right Now?

The Invesco S&P 500 Equal Weight Health Care ETF (RYH) made its debut on 11/01/2006, and is a smart beta exchange traded fund that provides broad exposure to the Health Care ETFs category of the market.

What Are Smart Beta ETFs?

The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.

Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.

However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.

Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.

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

Fund Sponsors & Index

Managed by Invesco, RYH has amassed assets over $948.98 million, making it one of the larger ETFs in the Health Care ETFs. Before fees and expenses, RYH seeks to match the performance of the S&P 500 Equal Weight Health Care Index.

The S&P 500 Equal Weight Health Care Index equals weights stocks in the health care sector of the S&P 500 Index.

Cost & Other Expenses

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

Annual operating expenses for this ETF are 0.40%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 0.64%.

Sector Exposure and Top Holdings

Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, although it’s still important for investors to research a fund’s holdings.

For RYH, it has the heaviest allocation in the Healthcare sector –about 100% of the portfolio.

When you look at individual holdings, Moderna Inc (MRNA) accounts for about 1.70% of the fund’s total assets, followed by Universal Health Services Inc (UHS) and Align Technology Inc (ALGN).

The top 10 holdings account for about 16.37% of total assets under management.

Performance and Risk

The ETF has lost about -2.70% and is down about -6.11% so far this year and in the past one year (as of 03/24/2023), respectively. RYH has traded between $249.96 and $315.41 during this last 52-week period.

The ETF has a beta of 0.86 and a standard deviation of 19.89% for the trailing three-year period, making it a medium risk choice in the space. With about 65 holdings, it effectively diversifies company-specific risks.

Alternatives

Invesco S&P 500 Equal Weight Health Care ETF is a reasonable option for investors seeking to outperform the Health Care ETFs segment of the market. However, there are other ETFs in the space which investors could consider.

The Vanguard Health Care ETF (VHT) tracks the MSCI US Investable Market Health Care 25/50 Index and the Health Care Select Sector SPDR ETF (XLV) tracks Health Care Select Sector Index. Vanguard Health Care ETF has $16.24 billion in assets, Health Care Select Sector SPDR ETF has $37.64 billion. VHT has an expense ratio of 0.10% and XLV charges 0.10%.

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

bottom line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on the latest developments in the ETF investing universe, please visit the Zacks ETF Center.

Want the latest recommendations from Zacks Investment Research? Today, you can download the 7 Best Stocks for the Next 30 Days. Click to get this free report

Invesco S&P 500 Equal Weight Health Care ETF (RYH): ETF Research Reports

Universal Health Services, Inc. (UHS) : Free Stock Analysis Report

Align Technology, Inc. (ALGN) : Free Stock Analysis Report

Moderna, Inc. (MRNA) : Free Stock Analysis Report

Health Care Select Sector SPDR ETF (XLV): ETF Research Reports

Vanguard Health Care ETF (VHT): ETF Research Reports

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Zacks Investment Research