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

The Invesco S&P 500 Revenue ETF (RWL) is designed to provide extensive exposure to the Large Cap Value segment of the U.S. equity market. This passively managed exchange-traded fund (ETF) was launched on February 22, 2008, and is sponsored by Invesco.

With assets exceeding $5.03 billion, RWL is among the larger ETFs aiming to track the Large Cap Value segment of the U.S. equity market.

Why Choose Large Cap Value?

Large cap companies generally possess a market capitalization exceeding $10 billion. These companies are often considered stable investments due to their lower risk profiles and predictable cash flows, especially when compared to mid and small cap companies.

Value stocks typically display lower-than-average price-to-earnings and price-to-book ratios, alongside modest sales and earnings growth rates. Historically, in most market conditions, value stocks have surpassed growth stocks in performance. However, in strongly bullish markets, value stocks may lag behind growth stocks.

Understanding Costs

When assessing an ETF’s total return, it is crucial to consider expense ratios. Generally, lower-cost funds can outperform their more expensive counterparts over time, assuming all other factors are constant.

RWL has an annual operating expense ratio of 0.39%, aligning it with many similar products within its category. Additionally, it boasts a 12-month trailing dividend yield of 1.35%.

Sector Exposure and Key Holdings

ETFs are designed to offer diversified exposure to minimize the risk associated with individual stocks. Nevertheless, investors should still analyze a fund's holdings prior to making an investment. Most ETFs maintain transparency by providing daily disclosure of their holdings.

This ETF has a significant allocation to the Healthcare sector, representing approximately 19.40% of its portfolio. The Financials and Consumer Staples sectors follow closely in this regard.

In terms of specific holdings, Walmart Inc. (WMT) constitutes around 3.84% of total assets, with Amazon.com Inc. (AMZN) and UnitedHealth Group Inc. (UNH) also featured among the top holdings. The top 10 holdings collectively account for about 23.27% of total assets under management.

Performance Metrics and Risk Evaluation

RWL aims to replicate the returns of the OFI Revenue Weighted Large Cap Index, prior to fees and expenses. The S&P 500 Revenue-Weighted Index applies a rules-based approach to re-weighting the constituent securities of the S&P 500 Index based on revenue, with a maximum weighting cap of 5% per company.

Thus far in the current year, the ETF has achieved a return of approximately 5.78%, and it has increased by about 20.61% over the last year (as of February 14, 2025). Over the past 52 weeks, RWL has traded within a range of $88.24 to $104.10.

With a beta of 0.96 and a standard deviation of 14.84% over the trailing three-year period, RWL is categorized as a medium-risk investment. It consists of around 504 holdings, which helps to effectively diversify the risks associated with individual companies.

Considering Alternatives

Invesco S&P 500 Revenue ETF is rated with a Zacks ETF Rank of 3 (Hold), which reflects expected asset class return, expense ratio, momentum, and various other factors. As a result, RWL presents a viable option for investors interested in the Style Box - Large Cap Value category. However, investors might also wish to explore alternative ETF options in this segment.

For example, the Schwab U.S. Dividend Equity ETF (SCHD) and the Vanguard Value ETF (VTV) can be considered as similar investment avenues. The Schwab U.S. Dividend Equity ETF manages $67.92 billion in assets, while Vanguard Value ETF has $136.06 billion. SCHD charges an expense ratio of 0.06%, while VTV has a lower rate of 0.04%.

Final Thoughts

As a strong choice for long-term investors, passively managed ETFs like RWL are favored by both institutional and retail investors. Their appeal lies in factors such as low costs, transparency, flexibility, and tax efficiency.

For those interested in exploring this product along with other ETFs, it is advisable to screen various products to align with individual investment goals and stay updated on the latest trends within the ETF investment landscape.

ETF, Investment, Finance