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The Invesco S&P 500 Equal Weight Technology ETF (RYT) made its debut on 11/01/2006, and is a smart beta exchange traded fund that provides broad exposure to the Technology 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.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $2.07 billion, this makes it one of the larger ETFs in the Technology ETFs. RYT is managed by Invesco. This particular fund seeks to match the performance of the S&P 500 Equal Weight Information Technology Index before fees and expenses.
The S&P 500 Equal Weight Information Technology Index equally weights stocks in the information technology 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 one of the least expensive products in the space.
It's 12-month trailing dividend yield comes in at 0.65%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Information Technology sector - about 100% of the portfolio.
When you look at individual holdings, Epam Systems Inc (EPAM) accounts for about 1.74% of the fund's total assets, followed by Enphase Energy Inc (ENPH) and Arista Networks Inc (ANET).