Many of the top exchange-traded funds (ETFs) in the market these days rely heavily on overpriced tech stocks like Nvidia (NASDAQ:NVDA). The danger, however, is that those funds could fall quicky if valuations of some of those key holdings nosedive. And that can happen if a recession hits and investors grow more concerned about valuations.
But one ETF which makes valuation a priority is the Invesco S&P 500 Quality ETF (NYSE Arca:SPHQ). It tracks stocks which have a high quality score, which factors in return on equity and other metrics. The fund averages a price-to-earnings ratio of 25, which is modest especially when compared to how high some stocks are trading these days.
Tech stocks do account for the largest piece of the fund but at 34%, they don’t have an overwhelming majority like investors will find in other top-performing ETFs. And the top three holdings in the ETF offer a bit more diversity with Broadcom (NASDAQ:AVGO), Mastercard (NYSE:MA), and Johnson & Johnson (NYSE:JNJ) all being in different industries.
The fund’s diversification and focus on value is what makes this a potentially great ETF to hold right now. It has a low management fee of 0.15% and can make for a good long-term investment. Year to date, the ETF has generated total returns (including dividends) of around 26% while the S&P 500’s total returns are under 23%.
Whether you want less exposure to tech stocks or just a more value-focused fund to hold in your portfolio, the Invesco S&P 500 Quality ETF can make for an ideal investment right now.
