We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is Invesco Defensive Equity ETF (DEF) a Strong ETF Right Now?
Read MoreHide Full Article
The Invesco Defensive Equity ETF made its debut on 12/15/2006, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Large Cap Growth category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
Because the fund has amassed over $369.35 million, this makes it one of the average sized ETFs in the Style Box - Large Cap Growth. DEF is managed by Invesco. DEF seeks to match the performance of the Guggenheim Defensive Equity Index before fees and expenses.
The Guggenheim Defensive Equity Index is comprised of approximately 100 stocks selected from the S&P 500 Index based on investment and other screening criteria. The companies selected have potentially superior risk-return profiles during periods of stock market weakness while still offering the potential for gains during periods of market strength.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for DEF are 0.53%, which makes it on par with most peer products in the space.
DEF's 12-month trailing dividend yield is 1.18%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Healthcare sector - about 24.20% of the portfolio. Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Danaher Corp (DHR - Free Report) accounts for about 1.14% of total assets, followed by Thermo Fisher Scientific Inc (TMO - Free Report) and Copart Inc (CPRT - Free Report) .
Its top 10 holdings account for approximately 10.95% of DEF's total assets under management.
Performance and Risk
The ETF has added roughly 15.33% so far this year and was up about 25.25% in the last one year (as of 09/22/2021). In the past 52-week period, it has traded between $53.51 and $70.
The ETF has a beta of 0.88 and standard deviation of 21.74% for the trailing three-year period, making it a medium risk choice in the space. With about 102 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco Defensive Equity ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Growth ETF (VUG - Free Report) tracks CRSP U.S. Large Cap Growth Index and the Invesco QQQ (QQQ - Free Report) tracks NASDAQ-100 Index. Vanguard Growth ETF has $83.68 billion in assets, Invesco QQQ has $188.90 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Growth.
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.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Is Invesco Defensive Equity ETF (DEF) a Strong ETF Right Now?
The Invesco Defensive Equity ETF made its debut on 12/15/2006, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - Large Cap Growth category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
Because the fund has amassed over $369.35 million, this makes it one of the average sized ETFs in the Style Box - Large Cap Growth. DEF is managed by Invesco. DEF seeks to match the performance of the Guggenheim Defensive Equity Index before fees and expenses.
The Guggenheim Defensive Equity Index is comprised of approximately 100 stocks selected from the S&P 500 Index based on investment and other screening criteria. The companies selected have potentially superior risk-return profiles during periods of stock market weakness while still offering the potential for gains during periods of market strength.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for DEF are 0.53%, which makes it on par with most peer products in the space.
DEF's 12-month trailing dividend yield is 1.18%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Healthcare sector - about 24.20% of the portfolio. Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Danaher Corp (DHR - Free Report) accounts for about 1.14% of total assets, followed by Thermo Fisher Scientific Inc (TMO - Free Report) and Copart Inc (CPRT - Free Report) .
Its top 10 holdings account for approximately 10.95% of DEF's total assets under management.
Performance and Risk
The ETF has added roughly 15.33% so far this year and was up about 25.25% in the last one year (as of 09/22/2021). In the past 52-week period, it has traded between $53.51 and $70.
The ETF has a beta of 0.88 and standard deviation of 21.74% for the trailing three-year period, making it a medium risk choice in the space. With about 102 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco Defensive Equity ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Growth ETF (VUG - Free Report) tracks CRSP U.S. Large Cap Growth Index and the Invesco QQQ (QQQ - Free Report) tracks NASDAQ-100 Index. Vanguard Growth ETF has $83.68 billion in assets, Invesco QQQ has $188.90 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Growth.
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.