Invesco S&P 100 Equal Weight ETF (EQWL)

Invesco S&P 100 Equal Weight ETF (QQEW): An Overview

Profile:

Invesco S&P 100 Equal Weight ETF (QQEW) is an exchange-traded fund (ETF) that tracks the S&P 100 Equal Weight Index. This index holds the 100 largest non-financial companies in the United States, with each company weighted equally within the index. Unlike traditional market-cap weighted indices, where larger companies hold more influence, QQEW offers equal exposure to each of the 100 constituents, regardless of their size.

Objective:

QQEW's primary goal is to provide investors with broad exposure to the US large-cap stock market through an equal-weighted approach, seeking to capture the performance of the underlying index. By holding every component with equal weight, the ETF aims to mitigate concentration risk associated with large-cap companies and potentially generate alpha through diversification.

Issuer:

• Invesco:

  • A reputable and experienced global asset management firm with over $1.7 trillion in assets under management.
  • Established in 1952 with a long-standing history and a commitment to excellence in product innovation and client service.
  • Possesses strong market leadership with a wide range of ETFs covering diverse market segments.

• Invesco S&P 500® Equal Weight Index (SPXXEWTR): The underlying index tracked by QQEW is constructed and maintained by S&P Dow Jones Indices, a globally recognized provider of indices for investment products.

Market Share:

As of March 31, 2023, QQEW held an estimated market share of 0.14% in the US Large-Cap Growth Equity ETFs category. It is considered a small to mid-sized ETF within this sector.

Total Net Assets:

QQEW currently holds over $900 million in total net assets (as of March 31, 2023). This indicates significant investor interest and confidence in the ETF.

Moat:

The ETF's key moat lies in its unique investment strategy:

• Equal-weighting approach: The elimination of large-cap bias provides diversification benefits and the potential for outperformance compared to market-cap weighted alternatives.

• Low-cost access: With an expense ratio of 0.20%, QQEW offers investors a cost-effective way to access this specific investment strategy.

Financial Performance:

• Year-to-date (YTD) return: 2.03% as of April 4, 2023. (Please update for future dates with new data and adjust date references to maintain current accuracy).

• Long-term historical returns: Have generally tracked the performance of the underlying index closely with periods of outperformance. However, past performance is not necessarily indicative of future results.

• Risk-adjusted return (Sharpe Ratio): This provides insight into the risk taken versus return generated. QQEW typically exhibits a lower Sharpe Ratio compared to market-cap weighted Large-Cap indices due to its higher risk profile.

Growth Trajectory:

• Consistent inflows of assets indicate sustained investor interest in the ETF. This suggests continued growth potential in the coming years.
• However, the growth trajectory of equal-weighted strategies historically tends to fluctuate over long periods due to their rebalancing mechanisms.

Liquidity:

• Average daily trading volume of approximately 236,000 shares. This provides reasonable liquidity for trading and investing in the ETF.
• Tight bid-ask spread, generally within a few pennies. This implies minimal transaction costs associated with buying or selling the ETF.

Market Dynamics:

• Economic growth: A robust economy typically favors large-cap stocks, which can positively impact QQEW. Conversely, weak economic activity might limit its growth potential.
• Sectorial performance: As an equal-weighted approach, QQEW's performance is influenced by diverse sectors. Strong performance across a variety of sectors can drive returns, while lagging sectors may weigh on performance.
• Interest rate fluctuations: Rising interest rates may put pressure on larger-cap growth stocks.

Competitors:

• **iShares S&P 100 Fund (OEF)
• **Vanguard S&P 500 Fund (VOO)
• Schwab Total Stock Market Index (SWTSX)

Expense Ratio:

QQEW charges an expense ratio of 0.20%, making it competitively priced compared to other ETFs within its category.

Investment approach and strategy:

• Strategy: Tracks the S&P 100 Equal Weight Index by holding a representative basket of all its underlying stocks. The index applies the equal-weighting methodology with regular rebalancing to maintain equal allocation across every component.
• Composition: Holds 100 large-cap US stocks across various sectors, representing approximately 64% of the total US stock market capitalization.