Get Unique Access to the U.S. Energy Market With RYE | ETF Trends

The Invesco S&P 500® Equal Weight Energy ETF (RYE) offers a unique way to access the U.S. energy market, giving investors seeking to avoid cap-weighted products an alternative way to bet on oil stocks. 

The energy sector has been a top performer year to date in 2022, carrying momentum from 2021 when the sector first started to heat up. RYE has returned 3.06% over one month and 46.76% year to date as of September 15. Over one year, RYE has returned 66.24%, according to VettaFi.

RYE tracks an index that equally weights stocks in the energy sector of the S&P 500 Index. RYE has 23 equally weighted holdings with the top 10 holdings amounting to 49.10% of the fund as of September 15. Holdings include Occidental Petroleum Corporation (OXY), Targa Resources Corp (TRGP), ConocoPhillips (COP), Hess Corporation (HES), and ONEOK Inc (OKE).

An equal weighting methodology may be particularly appealing in the top-heavy energy industry, where traditional cap weighting can result in significant concentration issues.

Advisors have continued to allocate to the strategy as energy has remained one of the only bright spots in the market, with energy companies forecasting healthy growth. The fund has seen $119 million in year-to-date net inflows.

The rotation toward energy in times of rising inflation is a time-tested strategy. The energy sector is less sensitive to inflation and rising interest rates than other income sectors. Energy stocks beat inflation 71% of the time from 1973 to 2020 and delivered an annual real return of 9.0% per year on average, according to Zacks.

Equities that pay dividends are also typically better positioned in inflationary and recessionary environments than the broader equity market or fixed-income investments. The energy sector ranks first in average dividend yield, according to VettaFi. 

RYE carries an expense ratio of 40 basis points and has an annual dividend yield of 1.93%.

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