Dj Lamb Weston Holdings Inc, Inst Holders, 3Q 2024 (Lw)

With a market cap of $10.9 billion, Lamb Weston Holdings, Inc. is a global leader in producing, marketing, and distributing value-added frozen potato products, including French fries and appetizers. The Eagle, Idaho-based company serves retail and food service customers across various channels, including restaurants, distributors, and retailers worldwide.

Shares of the frozen foods supplier have significantly underperformed the broader market over the past 52 weeks. LW has declined 21.8% over this time frame, while the broader S&P 500 Index ($SPX) has gained 31.1%. In 2024, shares of LW are down nearly 29%, compared to SPX’s 24.7% increase on a YTD basis.

Narrowing the focus, LW has also lagged behind the Consumer Staples Select Sector SPDR Fund’s 16.4% rise over the past 52 weeks and 12.6% return on a YTD basis.

A smart beta exchange traded fund, the Invesco S&P 500 Equal Weight Consumer Staples ETF (RSPS) debuted on 11/01/2006, and offers broad exposure to the Consumer Staples ETFs category of the market.

What Are Smart Beta ETFs?

The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.

Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.

On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.

Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.

Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.

Fund Sponsor & Index

The fund is managed by Invesco. RSPS has been able to amass assets over $304.66 million, making it one of the average sized ETFs in the Consumer Staples ETFs. This particular fund, before fees and expenses, seeks to match the performance of the S&P 500 EQL WEIGHT CONSUMER STAPLES INDX.

The S&P 500 Equal Weight Consumer Staples Index equally weights stocks in the consumer staples sector of the S&P 500 Index.

Cost & Other Expenses

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

With on par with most peer products in the space, this ETF has annual operating expenses of 0.40%.

The fund has a 12-month trailing dividend yield of 2.24%.

Sector Exposure and Top Holdings

Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.

Representing 100% of the portfolio, the fund has heaviest allocation to the Consumer Staples sector.

Taking into account individual holdings, Lamb Weston Holdings Inc (LW) accounts for about 3.31% of the fund's total assets, followed by Philip Morris International Inc (PM) and Monster Beverage Corp (MNST).

RSPS's top 10 holdings account for about 28.5% of its total assets under management.

Performance and Risk

Year-to-date, the Invesco S&P 500 Equal Weight Consumer Staples ETF has lost about -0.60% so far, and it's up approximately 4.94% over the last 12 months (as of 11/20/2024). RSPS has traded between $30.08 and $32.93 in this past 52-week period.

RSPS has a beta of 0.59 and standard deviation of 13.50% for the trailing three-year period. With about 39 holdings, it has more concentrated exposure than peers.

Alternatives

Invesco S&P 500 Equal Weight Consumer Staples ETF is a reasonable option for investors seeking to outperform the Consumer Staples ETFs segment of the market. However, there are other ETFs in the space which investors could consider.

Vanguard Consumer Staples ETF (VDC) tracks MSCI US Investable Market Consumer Staples 25/50 Index and the Consumer Staples Select Sector SPDR ETF (XLP) tracks Consumer Staples Select Sector Index. Vanguard Consumer Staples ETF has $7.14 billion in assets, Consumer Staples Select Sector SPDR ETF has $16.23 billion. VDC has an expense ratio of 0.10% and XLP charges 0.09%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Consumer Staples ETFs.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

Zacks Investment Research

Court: D. Idaho

Case: 1:24-cv-00282

Lead Plaintiff has been appointed to represent investors in the class action against Lamb Weston.

On April 4, 2024, Lamb Weston revealed severe issues with its new Enterprise Resource Planning (ERP) system, causing mismanagement of inventory and orders. These problems led to $135 million in lost sales for Q3 of fiscal year 2024 and a $330 million reduction in the full-year sales forecast.

Following this, dropped 19.4%.

Then, on June 13, 2024, shareholders filed a claim against Lamb Weston.

We’re keeping track of all updates and will notify investors about potential recovery.