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Designed to provide broad exposure to the Large Cap Value segment of the US equity market, the Invesco S&P Ultra Dividend Revenue ETF (RDIV) is a passively managed exchange traded fund launched on 10/01/2013.
The fund is sponsored by Invesco. It has amassed assets over $982.26 million, making it one of the average sized ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Companies that fall in the large cap category tend to have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.
While value stocks have lower than average price-to-earnings and price-to-book ratios, they also have lower than average sales and earnings growth rates. Value stocks have outperformed growth stocks in nearly all markets when you consider long-term performance, growth stocks are more likely to outpace value stocks in strong bull markets.
Costs
When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.39%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 3.44%.
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 to the Financials sector--about 22.10% of the portfolio. Healthcare and Utilities round out the top three.
Looking at individual holdings, Cardinal Health Inc (CAH) accounts for about 5.65% of total assets, followed by Valero Energy Corp (VLO) and Chevron Corp (CVX).
The top 10 holdings account for about 49.11% of total assets under management.
Performance and Risk
RDIV seeks to match the performance of the OFI Revenue Weighted Ultra Dividend Index before fees and expenses. The S&P 900 Dividend Revenue-Weighted Index is constructed using a rules-based methodology that starts with the S&P 900 Index, subject to a maximum 5% per company weighting.
The ETF has gained about 6.60% so far this year and is up roughly 8.81% in the last one year (as of 12/26/2022). In the past 52-week period, it has traded between $37.70 and $46.24.
The ETF has a beta of 1.09 and standard deviation of 32.21% for the trailing three-year period, making it a medium risk choice in the space. With about 61 holdings, it effectively diversifies company-specific risk.