Should You Invest in the Invesco S&P 500 Equal Weight Materials ETF (RTM)?

The Invesco S&P 500 Equal Weight Materials ETF (RTM) was launched on 11/01/2006, and is a passively managed exchange traded fund designed to offer broad exposure to the Materials - Broad segment of the equity market.

While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.

Investor-friendly, sector ETFs provide many options to gain low risk and diversified exposure to a broad group of companies in particular sectors. Materials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 15, placing it in bottom 6%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $450.33 million, making it one of the average sized ETFs attempting to match the performance of the Materials - Broad segment of the equity market. RTM seeks to match the performance of the S&P 500 Equal Weight Materials Index before fees and expenses.

The S&P 500 Equal Weight Materials Index is an unmanaged equal weighted version of the S&P 500 Materials Index that consists of the common stocks of the following industries: chemicals, construction materials, containers and packaging, metals and mining, and paper and forest products that comprise the Materials sector of the S&P 500 Index.

Costs

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Annual operating expenses for this ETF are 0.40%, making it one of the cheaper products in the space.

It has a 12-month trailing dividend yield of 1.40%.

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 in the Materials sector--about 100% of the portfolio.

Looking at individual holdings, Ball Corp (BLL) accounts for about 3.81% of total assets, followed by International Flavors & Fragrances Inc (IFF) and Sealed Air Corp (SEE).

The top 10 holdings account for about 37.48% of total assets under management.

Performance and Risk

The ETF has added about 25.57% and it's up approximately 41.62% so far this year and in the past one year (as of 11/03/2021), respectively. RTM has traded between $120.77 and $177.38 during this last 52-week period.

The ETF has a beta of 1.10 and standard deviation of 28.07% for the trailing three-year period, making it a medium risk choice in the space. With about 30 holdings, it has more concentrated exposure than peers.

Alternatives

Invesco S&P 500 Equal Weight Materials ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, RTM is an excellent option for investors seeking exposure to the Materials ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.

FlexShares Morningstar Global Upstream Natural Resources ETF (GUNR) tracks Morningstar Global Upstream Natural Resources Index and the Materials Select Sector SPDR ETF (XLB) tracks Materials Select Sector Index. FlexShares Morningstar Global Upstream Natural Resources ETF has $6.05 billion in assets, Materials Select Sector SPDR ETF has $7.75 billion. GUNR has an expense ratio of 0.46% and XLB charges 0.12%.

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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.