RSPU: A Great Utilities Fund That Works

seekingalpha06-04

Invesco S&P 500® Equal Weight Utilities ETF offers an equal-weighted approach to the utilities sector, providing a more democratic representation of the industry.The RSPU ETF currently holds 32 ...

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Arctic-Images I often reference the Utilities sector as a leading indicator of stock market volatility. Given it’s the most bond-like sector of the stock market, it tends to do well when there are concerns about an economic slowdown and more violent equity market ahead. But when I do these references to Utilities, I do them on market-cap weight versions of them. As I’ve noted in my prior writings, I’m a fan of equal weighted strategies in this part of the cycle. So why not apply that to Utilities?","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU1621767810.EUR":"AZ EQUITY GLOBAL INFRASTRUCTURE \"A\" (EUR) INC","IE00BMG7P926.USD":"Legg Mason ClearBridge - Global Infrastructure Income A Acc USD","LU2384288077.EUR":"AZ EQUITY GLOBAL INFRASTRUCTURE \"A-INS\" (EUR) ACC","BK4550":"红杉资本持仓","IE00BMG7P819.SGD":"Legg Mason ClearBridge - Global Infrastructure Income A Mdis SGD-H Plus","BK4588":"碎股","LU0511384066.AUD":"SUSTAINABLE GLOBAL THEMATIC PORTFOLIO \"A\" (AUDHDG) ACC","LU1621768115.EUR":"AZ EQUITY GLOBAL INFRASTRUCTURE \"B\" (EUR) INC","LU0289961442.SGD":"SUSTAINABLE GLOBAL THEMATIC PORTFOLIO \"AX\" (SGD) ACC","IE00BMG7P694.USD":"Legg Mason ClearBridge - Global Infrastructure Income A Mdis USD Plus","SSO":"两倍做多标普500ETF","LU1064131342.USD":"Fullerton Lux Funds - Global Absolute Alpha A Acc USD","SH":"标普500反向ETF","LU0786609619.USD":"高盛全球千禧一代股票组合Acc","BK4581":"高盛持仓","BK4504":"桥水持仓",".SPX":"S&P 500 Index","RSPU":"Invesco S&P 500 Equal Weight Utilities ETF","SPXU":"三倍做空标普500ETF","IE00BJTD4N35.SGD":"Neuberger Berman US Long Short Equity A1  Acc SGD-H","LU1978683503.SGD":"Blackrock Sustainable Energy A2 SGD-H","LU1093756168.USD":"FRANKLIN K2 ALTERNATIVE STRATEGIES \"A\" (USD) ACC","IE00BD4GTV84.USD":"LEGG MASON CLEARBRIDGEINFRASTRUCTURE VALUE \"A\" (USDHDG) ACC","IE00BMG7P587.USD":"LEGG MASON CLEARBRIDGE GLOBAL INFRASTRUCTURE INCOM \"A\" (USD) INC","SPY":"标普500ETF","LU2637428348.USD":"NORDEA 1 GLOBAL SUSTAINABLE LISTED REAL ASSETS \"MP\" (USD) INC","LU1988902786.USD":"FULLERTON LUX FUNDS GLOBAL ABSOLUTE ALPHA \"I\" (USD) ACC","OEF":"标普100指数ETF-iShares","VOO":"Vanguard标普500ETF","IE00BJTD4V19.USD":"NEUBERGER BERMAN US LONG SHORT EQUITY \"A1\" (USD) ACC","LU1670628061.USD":"M&G (LUX) NORTH AMERICAN DIVIDEND \"A\" (USD) INC","LU0312595415.SGD":"Schroder ISF Global Climate Change Equity A Acc SGD","IVV":"标普500指数ETF","BK4559":"巴菲特持仓","LU1093756325.SGD":"FTIF - Franklin K2 Alt Strat Fd A (acc) SGD-H1","XLU":"公共事业指数ETF-SPDR","BK4534":"瑞士信贷持仓","IE00BD4GTT62.SGD":"Legg Mason ClearBridge Infrastructure Value A SGD-H (mdis) plus","FDN":"First Trust Dow Jones Internet I","BK4533":"AQR资本管理(全球第二大对冲基金)","BK4081":"电力公用事业","BK4566":"资本集团","SDS":"两倍做空标普500ETF","NEE":"新纪元能源","UPRO":"三倍做多标普500ETF","OEX":"标普100","LU1670627923.USD":"M&G (LUX) NORTH AMERICAN DIVIDEND \"A\" (USD) ACC","LU2264538146.SGD":"Fullerton Lux Funds - Global Absolute Alpha A Acc SGD","LU1621767737.EUR":"AZ EQUITY GLOBAL INFRASTRUCTURE \"AAZ\" (EUR) ACC"},"translate_title":"RSPU：一个有效的伟大公用事业基金","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"XLU":1,"NEE":1,"RSPU":1,"SPY":0.9,"VOO":0.9,"FDN":0.9,"UPRO":0.6,"OEF":0.6,"OEX":0.6,"SDS":0.6,"SH":0.6,"SPXU":0.6,"SSO":0.6,"ESmain":0.6,".SPX":0.6,"IVV":0.6},"content_text":"Invesco S&P 500® Equal Weight Utilities ETF offers an equal-weighted approach to the utilities sector, providing a more democratic representation of the industry.The RSPU ETF currently holds 32 holdings, with no position greater than 4%, resulting in a balanced portfolio.RSPU has outperformed the Utilities Select Sector SPDR Fund, suggesting that the equal-weighting strategy has been successful.   Arctic-Images I often reference the Utilities sector as a leading indicator of stock market volatility. Given it’s the most bond-like sector of the stock market, it tends to do well when there are concerns about an economic slowdown and more violent equity market ahead. But when I do these references to Utilities, I do them on market-cap weight versions of them. As I’ve noted in my prior writings, I’m a fan of equal weighted strategies in this part of the cycle. So why not apply that to Utilities? That’s what the Invesco S&P 500® Equal Weight Utilities ETF (NYSEARCA:RSPU) aims for. Launched in November 2006, RSPU tracks the performance of the S&P 500® Equal Weight Utilities Plus Index. This index includes the utilities and telecommunication services sectors of the S&P 500® Index, weighted equally across all companies. RSPU eliminates the size bias inherent to market cap-weighted indices in favor of a more democratic representation of the utilities universe. A Look At The Holdings The fund currently has 32 holdings. Looking at the holdings, no position is greater than 4%. The relative weightings are due to out/underperformance among the stocks in the fund.   invesco.com I like the balance here as there are some Utilities ETFs (like XLU) which have companies like NextEra Energy (NEE) at a 14.77% weighting. The result is the performance patterns will look different given dramatically altered weightings. As to industry allocations, the equal weighting here results in Electric and Multi-Utilities making up more than 85% of the fund. This is precisely what you want to see for something so tied to a bond-like, “need” sector of the stock market.   invesco.com Peer Comparison: RSPU vs. XLU I mentioned the Utilities Select Sector SPDR® Fund (XLU) earlier because this is the one I often look at for a tell on market movement and for relative momentum potential. XLU tracks the Utilities Select Sector Index, which in turn tracks the utilities sector of the S&P 500 (SP500). XLU is the largest utilities ETF by assets under management, with over $13 billion. When we look at the price ratio of RSPU to XLU, we find that RSPU has performed exceptionally well, suggesting that equal-weighting overall has worked. The most recent movement has more to do with company-specific dynamics in the top 10 of XLU, but regardless, I like what I see here.   stockcharts.com Weighing the Pros and Cons First the pluses: the equal-weight methodology of the fund means that you’re unlikely to be overexposed to any one company or even sub-sector – your portfolio is thus less risky. Second, utilities have a reputation for being a more defensive sector, meaning they have the potential to be a good bet in times of potential market volatility and economic downturns. The big thing for me is that the Utilities sector has clearly shown significant relative strength, which I suspect will persist. I say this because economically, things are slowing, and the outperformance as of late is consistent with late-cycle behavior for the broader markets. That, combined with the likelihood of the Fed cutting rates, making the dividend component of Utilities total return more attractive, should result in broader rotation to the sector. The downside? The utilities sector tends to be perceived as a slower-growth sector, and this could mean lower returns in bull markets (although you’re less exposed to the downside). The equally weighted structure also has the potential to incur higher turnover than a traditional fund, and with that comes extra transaction costs given the rebalancing done. Conclusion - A Prudent Choice for Utility Exposure  I like this fund a lot. I like Utilities at this point in the cycle, and I like the equal weighted approach in general. Invesco S&P 500® Equal Weight Utilities ETF can be considered a good addition to an investment portfolio for investors that want to reduce their exposure to market shocks. There’s nothing wrong with XLU either, I just think that getting less company-specific exposure matters here. And if markets turn much more volatile, I suspect you’ll see more and more interest in the sector broadly. Solid portfolio here.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2440941737"}