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The S&P 500 High Beta ETF: Here's How To Trade It


  • The Invesco S&P 500 High Beta ETF selects the top 100 most sensitive stocks in the S&P 500 over the past year.
  • But the time to invest in a high beta fund was many months ago, and now, the risk to return ratio doesn't make sense.
  • The ETF still holds several high-potential stocks in cyclical industries like Travel Services, Airlines, and Resorts & Casinos, but their futures are very uncertain with the Delta variant in play.
  • This article will provide investors a simple framework for determining when to rotate in and out of sensitive ETFs like SPHB.
High risk meter
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Investment Thesis

The Invesco S&P 500 High Beta ETF (SPHB) is anything but a buy-and-hold fund. Investors need to be extremely careful about choosing entry points because, over the long run, the S&P 500 is easily the better pick by both absolute

This article was written by

The Sunday Investor profile picture

I perform independent fundamental analysis for over 850 U.S. Equity ETFs and aim to provide you with the most comprehensive ETF coverage on Seeking Alpha. My insights into how ETFs are constructed at the industry level are unique rather than surface-level reviews that’s standard on other investment platforms. My deep-dive articles always include a set of alternative funds, and I am active in the comments section and ready to answer your questions about the ETFs you own or are considering.

My qualifications include a Certificate in Advanced Investment Advice from the Canadian Securities Institute, the completion of all educational requirements for the Chartered Investment Manager (CIM) designation, and a Bachelor of Commerce degree with a major in Accounting. In addition, I passed the CFA Level 1 Exam and am on track to become licensed to advise on options and derivatives in 2023. In November 2021, I became a contributor for the Hoya Capital Income Builder Marketplace Service and manage the "Active Equity ETF Model Portfolio", which as a total return objective. Sign up for a free trial today! Hoya Capital Income Builder.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of SPY either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (2)

Good observations and interesting technique. Thanks.
Also, since SPY and SPHB are highly correlated , for a Buy, one would like to see SPY and other well chosen selections in a rebound for confirmation and support.

Now you seem to be at Neutral (Hold).
Do you have any keys, technical, and otherwise, for a Sell?
The Sunday Investor profile picture
@SeekingTruth Try monitoring median six-month returns by sector for a large basket of stocks like the S&P 900. I've found that during periods of high volatility among sectors, the best-performing sectors tend to do the worst over the next six months, and vice versa.

The end of July marked the end of that "high volatility" period, though, but if you were following that you would have been part of the Financials sector comeback. Another example is that as of the end of June, the strategy would have called to be overweight Utilities, Consumer Staples, and Health Care (the three worst-performing sectors on a six-month trailing basis). They ended up being the 3rd, 8th, and 1st best sectors in July. An ETF like SPHB will pretty much never hold much in these sectors, so that was the primary reason it underperformed SPY by over 6% in July. On the flipside, Energy had the best six-month median returns as of June 30, and then went on to be the worst-performing sector in July. Financials was in 2nd place, and then was the 9th-best. Finally, Consumer Cyclicals was previously in 3rd place but was in 7th place in July.

In my view, investors often get too caught up in the style/strategy of a fund and not about what it's actually holding. Taking a bit more of a macro view has been helpful to me.
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