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Is Invesco Defensive Equity ETF (DEF) a Strong ETF Right Now?
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Making its debut on 12/15/2006, smart beta exchange traded fund Invesco Defensive Equity ETF provides investors broad exposure to the Style Box - Large Cap Growth category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $264.06 million, this makes it one of the average sized ETFs in the Style Box - Large Cap Growth. DEF is managed by Invesco. This particular fund 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
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.53%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.19%.
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 23.40% of the portfolio, the fund has heaviest allocation to the Healthcare sector; 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) .
DEF's top 10 holdings account for about 10.95% of its total assets under management.
Performance and Risk
Year-to-date, the Invesco Defensive Equity ETF return is roughly 14.72% so far, and is up about 17.36% over the last 12 months (as of 10/14/2021). DEF has traded between $53.51 and $70 in this past 52-week period.
The ETF has a beta of 0.88 and standard deviation of 21.64% 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 $82.68 billion in assets, Invesco QQQ has $184.59 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.
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Is Invesco Defensive Equity ETF (DEF) a Strong ETF Right Now?
Making its debut on 12/15/2006, smart beta exchange traded fund Invesco Defensive Equity ETF provides investors broad exposure to the Style Box - Large Cap Growth category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $264.06 million, this makes it one of the average sized ETFs in the Style Box - Large Cap Growth. DEF is managed by Invesco. This particular fund 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
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.53%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.19%.
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 23.40% of the portfolio, the fund has heaviest allocation to the Healthcare sector; 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) .
DEF's top 10 holdings account for about 10.95% of its total assets under management.
Performance and Risk
Year-to-date, the Invesco Defensive Equity ETF return is roughly 14.72% so far, and is up about 17.36% over the last 12 months (as of 10/14/2021). DEF has traded between $53.51 and $70 in this past 52-week period.
The ETF has a beta of 0.88 and standard deviation of 21.64% 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 $82.68 billion in assets, Invesco QQQ has $184.59 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.