RYE’s Returns YTD Top 52% | ETF Trends

The Invesco S&P 500 Equal Weight Energy ETF (RYE) is a great fit for investors looking to enhance their portfolios with an energy ETF that uses a unique methodology.

This ETF offers a unique way to access the U.S. energy market, giving investors seeking to avoid market cap-weighted products an alternative way to bet on oil stocks, according to VettaFi. 

The energy sector has been a top performer in recent months and in 2021. RYE has returned 28.09% over a one-month period and 52.20% year to date as of August 24, according to VettaFi.

RYE tracks an index that equally weights stocks in the energy sector of the S&P 500 Index. RYE has 24 equally weighted holdings with the top 10 holdings amounting to 49.06% of the fund.

Investors have continued to flock to the strategy as inflation and rising interest rates have dominated investors’ concerns this year, as well as the potential for a recession. The fund has seen $121 million in net inflows since the beginning of the year, according to VettaFi.

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 within a time span of 1973–2020 and delivered an annual real return of 9.0% per year on average, according to Zacks.

Equities that pay dividends are 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%, according to VettaFi.

For more news, information, and strategy, visit the Portfolio Strategies Channel.