Launched on 12/23/2014, the PowerShares Russell 1000 Equal Weight Portfolio (EQAL) is a passively managed exchange traded fund designed to provide a broad exposure to the Large Cap Blend segment of the US equity market.
The fund is sponsored by Invesco. It has amassed assets over $416.15 M, making it one of the average sized ETFs attempting to match the Large Cap Blend segment of the US equity market.
Why Large Cap Blend
Large cap companies typically have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.
Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.
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 0.20%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 1.27%.
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 Information Technology sector--about 13% of the portfolio. Energy and Industrials round out the top three.
Looking at individual holdings, Whiting Petroleum Corp (WLL) accounts for about 0.33% of total assets, followed by Hollyfrontier Corp (HFC) and Pbf Energy Inc (PBF).
The top 10 holdings account for about 2.8% of total assets under management.
Performance and Risk
EQAL seeks to match the performance of the Russell 1000 Equal Weight Index before fees and expenses. 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.
The ETF has added about 3.65% so far this year and was up about 14.47% in the last one year (as of 06/13/2018). In the past 52-week period, it has traded between $28.08 and $32.73.
The ETF has a beta of 1.03 and standard deviation of 13.72% for the trailing three-year period, making it a medium risk choice in the space. With about 962 holdings, it effectively diversifies company-specific risk.
Alternatives
PowerShares Russell 1000 Equal Weight Portfolio carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, EQAL is a sufficient option for those seeking exposure to the Large Cap ETFs area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Core S&P 500 ETF (IVV) and the SPDR S&P 500 ETF (NYSE:SPY) track a similar index. While iShares Core S&P 500 ETF has $150.47 B in assets, SPDR S&P 500 (MX:SPY) ETF has $266.10 B. IVV has an expense ratio of 0.04% and SPY charges 0.09%.
Bottom-Line
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are 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.
PWRSH-R1000 EW (EQAL): ETF Research Reports
SPDR-SP 500 TR (SPY): ETF Research Reports
ISHARS-SP500 (IVV): ETF Research Reports
PBF Energy Inc. (PBF): Free Stock Analysis Report
HollyFrontier Corporation (HFC): Free Stock Analysis Report
Whiting Petroleum Corporation (WLL): Free Stock Analysis Report
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