Should Invesco S&P 500 Revenue ETF (RWL) Be on Your Investing Radar?

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If you’re interested in broad exposure to the Large Cap Value segment of the US equity market, look no further than the Invesco S&P 500 Revenue ETF (RWL), a passively managed exchange traded fund launched on 02/22/2008.

The fund is sponsored by Invesco. It has amassed assets over $1.14 billion, 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.

Value stocks are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their lower than average sales and earnings growth rates. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.

Costs

Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.

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 1.34%.

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 Healthcare sector–about 20.20% of the portfolio. Consumer Discretionary and Consumer Staples round out the top three.

Looking at individual holdings, Walmart Inc (WMT) accounts for about 4.25% of total assets, followed by Amazon.com Inc (AMZN) and Apple Inc (AAPL).

The top 10 holdings account for about 23.06% of total assets under management.

Performance and Risk

RWL seeks to match the performance of the OFI Revenue Weighted Large Cap Index before fees and expenses. The S&P 500 Revenue-Weighted Index is constructed by using a rules-based methodology that re-weights the constituent securities of the S&P 500 Index according to the revenue earned by the companies in the parent index- subject to a maximum 5% per company weighting.

The ETF return is roughly 0% so far this year and it’s up approximately 31.39% in the last one year (as of 01/06/2022). In the past 52-week period, it has traded between $62.29 and $81.24.

The ETF has a beta of 1.04 and standard deviation of 22.16% for the trailing three-year period, making it a medium risk choice in the space. With about 506 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco S&P 500 Revenue ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, RWL is a sufficient option for those seeking exposure to the Style Box – Large Cap Value area of the market. Investors might also want to consider some other ETF options in the space.

The iShares Russell 1000 Value ETF (IWD) and the Vanguard Value ETF (VTV) track a similar index. While iShares Russell 1000 Value ETF has $59.81 billion in assets, Vanguard Value ETF has $93.14 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.

Bottom-Line

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

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 500 Revenue ETF (RWL): ETF Research Reports
 
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
 
Apple Inc. (AAPL) : Free Stock Analysis Report
 
Walmart Inc. (WMT) : Free Stock Analysis Report
 
Vanguard Value ETF (VTV): ETF Research Reports
 
iShares Russell 1000 Value ETF (IWD): ETF Research Reports
 
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