The Invesco S&P 500 Equal Weight Utilities ETF (RYU) has seen a recent spike in flows as investors move into defensive sectors in preparation for a market downturn.
The fund is the most popular equal weight sector ETF offered by Invesco year to date as of September 26, as measured by net inflows. RYU has seen $222 million in net inflows year to date as of September 26, according to VettaFi. The fund has taken in $40 million in net inflows over a one-month period.
Investors have been moving into more defensive sectors following the Fed’s increasingly hawkish tone and the third subsequent 75 basis point interest rate hike. The main defensive sectors include utilities, healthcare, and consumer staples, all of which have outperformed broader equity indexes through August 2022.
RYU differs from other ETFs offering exposure to the S&P 500 utilities sector because it employs a unique equal-weighted strategy, meaning that component companies receive approximately equal allocations. That results in considerably more balanced exposure than other alternatives and a methodology that some investors believe will add value over the long haul, according to VettaFi.
RYU offers exposure to equities included in the S&P 500 Utilities Index, which covers the following industries: electric utilities, gas utilities, multi-utilities, unregulated power, water utilities, telecommunication service companies, including fixed-line, cellular, wireless, high bandwidth, and fiber-optic cable networks.
Top holdings in RYU as of September 26 include Constellation Energy Corporation (CEG), FirstEnergy Corp. (FE), CenterPoint Energy Inc (CNP), Atmos Energy Corporation, Inc (ATO), Consolidated Edison, Inc. (ED), Eversource Energy (ES), Alliant Energy Corp (LNT), PPL Corporation (PPL), Southern Energy Company (SO), and Duke Energy Corporation (DUK).
RYU carries a 40 basis point expense ratio. Incepted in 2006, the fund has garnered $449 million in assets under management since September 26.
For more news, information, and strategy, visit our Portfolio Strategies Channel.