Invesco S&P 500 High Beta ETF [SPHB] Stock Forecast

SPHB tracks 100 high-beta S&P 500 stocks. Launched in May 2011, the ETF has a reasonable 0.25% expense ratio, but has failed to gain much interest from an AUM perspective. Despite an upward-trending market over the last ten years, SPHB has lagged behind SPY by 30% while featuring, as expected, much higher volatility. Higher risk did not equal higher rewards. One likely reason is poor quality. I calculated a 8.26/10 profit score for SPHB, well behind SPY's 9.43/10 score, and backed by significant differences in ROTC and ROE margins.

The Invesco S&P 500 High Beta ETF seeks to track the S&P 500 High Beta Index, consisting of the 100 stocks with the highest beta. SPHB has underperformed the S&P 500 on both an absolute and risk-adjusted basis, but its exposure to mid-cap and small cap companies has been a key driver. SPHB has underperformed a blend of large cap, mid-cap, and small cap companies on a risk adjusted basis since inception.

Low-beta, steady stocks tend to have better risk-adjusted returns over time compared to high-beta stocks. The Invesco S&P 500 High Beta ETF focuses on high-beta stocks in the S&P 500 Index. Investing in SPHB can be rewarding during bull markets, but it comes with a high level of risk, especially in extended sectors like Technology.

High-beta stocks have outperformed defensive stocks in the stock market recently, raising questions about the effectiveness of low-volatility and dividend growth investing. ROBECO's research shows that low-volatility investing can significantly improve long-term performance, particularly in market environments with increased retail investor participation. Low-risk ETFs, such as healthcare names and dividend aristocrats, offer exposure to fundamentally strong factors and tend to perform well during periods of stagflation, high inflation, and decent economic growth.

High beta sustained its rally and handily outpaced the S&P 500 in July, underscoring the continued risk-on sentiment in the market. U.S. stocks rallied in July, as Wall Street celebrated rosy earnings and upbeat macroeconomic updates, including softening inflation and better-than-expected second-quarter GDP.

The two top-performing factors stood out during the first half for impressive outperformance over the benchmark. The S&P 500 High Beta Index and the S&P 500 Growth Index handily outpaced the parent S&P 500 during the first six months of 2023.

High beta stocks can provide leverage-like effects on returns, performing well during market upswings and worse during downturns. The Invesco S&P 500 High Beta ETF is a good investment during volatile market rebounds, using the VIX as an indicator. When the VIX is above 20, but below its level from 20 days ago, buy SPHB; hold until the VIX rises above its level from 20 days ago or falls below 20.

The Invesco S&P 500 High Beta ETF focuses on the highest beta stocks in the S&P 500 Index and has outperformed the S&P 500 this year. High beta stocks tend to outperform in bull markets and market rallies but exhibit larger drawdowns during risk-off events. The rally in the S&P 500 this year has been driven by only a handful of names, suggesting a potential risk-off event later this year, making it a good time for retail investors to sell SPHB and crystalize gains.

High beta has been a top-performing factor year to date, with its strong showing continuing into June. The Invesco S&P 500 High Beta ETF (SPHB), which tracks the S&P 500 High Beta Index, is up 13.6% over one month, while the parent S&P 500 has climbed 5.4%.

High beta was a leader among factor indexes in May, lifted by its heavy tilt toward the information technology sector. Uncertainty weighed heavily on U.S. markets in May.

Invesco S&P 500 High Beta ETF is a US stock and trading under the symbol SPHB

Invesco S&P 500 High Beta ETF stock price is $75.94 today.

Yes, Invesco S&P 500 High Beta ETF is a publicly traded company.