SPHB Maintains Leads Among S&P Factor Index Returns YTD

Despite last week’s sharp losses, high beta maintains its position as the top-returning S&P factor index in 2023.

The S&P 500 suffered its biggest percentage drop since September last week, declining 4.6%. All large-cap segments fell, but the S&P 500 High Beta Index – tracked by the Invesco S&P 500 High Beta ETF (SPHB) – held onto its current standing as the top-performing S&P factor index year to date.

As of market close Friday, high beta climbed 7.8% year to date, while the S&P 500 is up 0.9%. High beta outpacing its factor index peers in 2023 is a reversal from its 2022 performance.

“SPHB is concentrated in the information technology, consumer discretionary, and financial sectors and is a good way to exposure to higher risk large-cap stocks,” Todd Rosenbluth, head of research at VettaFi, said. “Many people came into 2023 willing to take on more risk than they were in 2022.”

SPHB has seen $255 million in net flows year to date and $166 million in net outflows over one year, according to ETF Database. The fund charges 25 basis points.

The S&P 500 High Beta Index is rebounding from a challenging past year. High beta was the worst-performing factor in December, declining 8.5%, and the third worst-performing factor in 2022, dropping 20.3%. To compare, the parent index S&P 500 declined 18.1% last year.

High beta’s sector tilts have led to its year-to-date outperformance. Compared to the S&P 500, high beta is significantly underweight to healthcare, the worst-performing sector year-to-date, while overweight to the third-best performer, consumer discretionary, according to the S&P 500 Factor Dashboard.

Holdings in SPHB as of March 10 include NVIDIA Corporation (NVDA), Monolithic Power Systems Inc (MPWR), Advanced Micro Devices Inc (AMD), Caesars Entertainment Inc (CZR), and ON Semiconductor Corporation (ON).

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