Designed to provide broad exposure to the Style Box - Large Cap Blend category of the market, the Invesco S&P 100 Equal Weight ETF (EQWL) is a smart beta exchange traded fund launched on 12/01/2006.

What Are Smart Beta ETFs?

Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.

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

On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.

By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.

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 $613.51 million, this makes it one of the average sized ETFs in the Style Box - Large Cap Blend. EQWL is managed by Invesco. This particular fund, before fees and expenses, seeks to match the performance of the Russell Top 200 Equal Weight Index.

The S&P 100 Equal Weight Index is designed to provide equal-weighted exposure to the securities of the largest 200 companies in the US equity market.

Cost & Other Expenses

When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.

Operating expenses on an annual basis are 0.25% for this ETF, which makes it on par with most peer products in the space.

It's 12-month trailing dividend yield comes in at 1.94%.

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, though it's still important for investors to research a fund's holdings.

EQWL's heaviest allocation is in the Financials sector, which is about 19.50% of the portfolio. Its Information Technology and Healthcare round out the top three.

Looking at individual holdings, 3m Co (MMM) accounts for about 1.15% of total assets, followed by Conocophillips (COP) and General Motors Co (GM).

Its top 10 holdings account for approximately 11.01% of EQWL's total assets under management.

Performance and Risk

The ETF return is roughly 4.21% and is up about 17.47% so far this year and in the past one year (as of 05/02/2024), respectively. EQWL has traded between $74.98 and $94.89 during this last 52-week period.

The fund has a beta of 0.98 and standard deviation of 15.54% for the trailing three-year period, which makes EQWL a medium risk choice in this particular space. With about 104 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco S&P 100 Equal Weight ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Blend segment of the market. However, there are other ETFs in the space which investors could consider.

IShares Core S&P 500 ETF (IVV) tracks S&P 500 Index and the SPDR S&P 500 ETF (SPY) tracks S&P 500 Index. IShares Core S&P 500 ETF has $433.87 billion in assets, SPDR S&P 500 ETF has $497.21 billion. IVV has an expense ratio of 0.03% and SPY charges 0.09%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Blend.

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 100 Equal Weight ETF (EQWL): ETF Research Reports

ConocoPhillips (COP) : Free Stock Analysis Report

3M Company (MMM) : Free Stock Analysis Report

General Motors Company (GM) : Free Stock Analysis Report

SPDR S&P 500 ETF (SPY): ETF Research Reports

iShares Core S&P 500 ETF (IVV): ETF Research Reports

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