Looking for broad exposure to the Large Cap Blend segment of the US equity market? You should consider the ALPS Equal Sector Weight ETF (EQL), a passively managed exchange traded fund launched on 07/07/2009.
The fund is sponsored by Alps. It has amassed assets over $376.39 million, 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
Companies that find themselves in the large cap category typically 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.
Blend ETFs are aptly named, since they tend to hold a mix of growth and value stocks, as well as show characteristics of both kinds of equities.
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 0.25%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.73%.
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.
Looking at individual holdings, Real Estate Select Sector Spdr Fund (XLRE) accounts for about 9.88% of total assets, followed by Utilities Select Sector Spdr Fund (XLU) and Consumer Staples Select Sector Spdr Fund (XLP).
The top 10 holdings account for about 91.95% of total assets under management.
Performance and Risk
EQL seeks to match the performance of the NYSE Select Sector Equal Weight Index before fees and expenses. The NYSE Equal Sector Weight Index comprises of all active Select Sector SPDR ETFs in an equal weighted portfolio. These sector includes Consumer Discretionary, Consumer Staples, Materials, Energy, Technology, Utilities, Financial, Industrial, Health Care & Real Estate.
The ETF has added roughly 14.30% so far this year and was up about 21.65% in the last one year (as of 08/26/2024). In the past 52-week period, it has traded between $96 and $124.23.
The ETF has a beta of 0.95 and standard deviation of 15.49% for the trailing three-year period, making it a medium risk choice in the space. With about 12 holdings, it has more concentrated exposure than peers.
Alternatives
ALPS Equal Sector Weight 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, EQL is a sufficient option for those seeking exposure to the Style Box - Large Cap Blend 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 (SPY) track a similar index. While iShares Core S&P 500 ETF has $517.71 billion in assets, SPDR S&P 500 ETF has $566.52 billion. IVV has an expense ratio of 0.03% 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.
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Get it free >>ALPS Equal Sector Weight ETF (EQL): ETF Research Reports
SPDR S&P 500 ETF (SPY): ETF Research Reports
Consumer Staples Select Sector SPDR ETF (XLP): ETF Research Reports
Utilities Select Sector SPDR ETF (XLU): ETF Research Reports
iShares Core S&P 500 ETF (IVV): ETF Research Reports
Real Estate Select Sector SPDR ETF (XLRE): ETF Research Reports
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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.
