Making its debut on 12/23/2014, smart beta exchange traded fund Invesco Russell 1000 Equal Weight ETF (EQAL) provides investors broad exposure to the Style Box - Large Cap Blend category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
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.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
EQAL is managed by Invesco, and this fund has amassed over $582.05 million, which makes it one of the average sized ETFs in the Style Box - Large Cap Blend. Before fees and expenses, EQAL seeks to match the performance of the Russell 1000 Equal Weight Index.
The Russell 1000 Equal Weight Index is composed of securities in the Russell 1000 Index and is equally weighted across nine sector groups with each security within the sector receiving equal weight.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Operating expenses on an annual basis are 0.20% 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 1.84%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
EQAL's heaviest allocation is in the Information Technology sector, which is about 11.90% of the portfolio. Its Financials and Industrials round out the top three.
Taking into account individual holdings, At&t Inc (T) accounts for about 0.60% of the fund's total assets, followed by Frontier Communications Parent Inc (FYBR) and Verizon Communications Inc (VZ).
EQAL's top 10 holdings account for about 5.64% of its total assets under management.
Performance and Risk
The ETF has lost about -6.88% so far this year and it's up approximately 2.87% in the last one year (as of 04/24/2025). In the past 52-week period, it has traded between $41.38 and $51.95.
The fund has a beta of 1.05 and standard deviation of 18.84% for the trailing three-year period, which makes EQAL a medium risk choice in this particular space. With about 995 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco Russell 1000 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.
SPDR S&P 500 ETF (SPY) tracks S&P 500 Index and the Vanguard S&P 500 ETF (VOO) tracks S&P 500 Index. SPDR S&P 500 ETF has $562.33 billion in assets, Vanguard S&P 500 ETF has $565.19 billion. SPY has an expense ratio of 0.09% and VOO charges 0.03%.
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 Russell 1000 Equal Weight ETF (EQAL): ETF Research Reports AT&T Inc. (T): Free Stock Analysis Report Verizon Communications Inc. (VZ): Free Stock Analysis Report SPDR S&P 500 ETF (SPY): ETF Research Reports Vanguard S&P 500 ETF (VOO): ETF Research Reports Frontier Communications Parent, Inc. (FYBR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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