Should You Invest in the Invesco S&P 500 Equal Weight Materials ETF (RTM)?

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Looking for broad exposure to the Materials – Broad segment of the equity market? You should consider the Invesco S&P 500 Equal Weight Materials ETF (RTM), a passively managed exchange traded fund launched on 11/01/2006.

An increasingly popular option among retail and institutional investors, passively managed ETFs offer low costs, transparency, flexibility, and tax efficiency; they are also excellent vehicles for long term investors.

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 3, placing it in top 13%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $384.17 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.

Costs

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 on par with most peer products in the space.

It has a 12-month trailing dividend yield of 2.01%.

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, Air Products And Chemicals Inc (APD) accounts for about 3.70% of total assets, followed by Avery Dennison Corp (AVY) and Celanese Corp (CE).

The top 10 holdings account for about 36.56% of total assets under management.

Performance and Risk

Year-to-date, the Invesco S&P 500 Equal Weight Materials ETF has gained about 9.07% so far, and is down about -2.14% over the last 12 months (as of 01/16/2023). RTM has traded between $141.04 and $190.46 in this past 52-week period.

The ETF has a beta of 1.08 and standard deviation of 30.02% 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.

Alternatives

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 reasonable 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 $5.90 billion in assets, FlexShares Morningstar Global Upstream Natural Resources ETF has $7.83 billion. XLB has an expense ratio of 0.10% and GUNR charges 0.46%.

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 Materials ETF (RTM): ETF Research Reports

Air Products and Chemicals, Inc. (APD) : Free Stock Analysis Report

Avery Dennison Corporation (AVY) : Free Stock Analysis Report

Celanese Corporation (CE) : Free Stock Analysis Report

Materials Select Sector SPDR ETF (XLB): ETF Research Reports

FlexShares Morningstar Global Upstream Natural Resources ETF (GUNR): ETF Research Reports

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