A smart beta exchange traded fund, the Invesco S&P 500 Equal Weight Financials ETF (RSPF) debuted on 11/01/2006, and offers broad exposure to the Financials ETFs category of the market.

What Are Smart Beta ETFs?

For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.

A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.

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.

Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.

This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.

Fund Sponsor & Index

RSPF is managed by Invesco, and this fund has amassed over $321.75 million, which makes it one of the average sized ETFs in the Financials ETFs. Before fees and expenses, RSPF seeks to match the performance of the S&P 500 EQUAL WEIGHT FINANCIALS INDEX .

The S&P 500 Equal Weight Financials Index equally weights stocks in the financial sector of the S&P 500 Index.

Cost & Other Expenses

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.

With on par with most peer products in the space, this ETF has annual operating expenses of 0.40%.

It has a 12-month trailing dividend yield of 1.20%.

Sector Exposure and Top Holdings

ETFs offer 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.

RSPF's heaviest allocation is in the Financials sector, which is about 100% of the portfolio.

Looking at individual holdings, Wells Fargo & Co (WFC) accounts for about 1.63% of total assets, followed by Raymond James Financial Inc (RJF) and Morgan Stanley (MS).

The top 10 holdings account for about 15.56% of total assets under management.