Back to top

Image: Bigstock

Should You Invest in the Invesco Dynamic Energy Exploration & Production ETF (PXE)?

Read MoreHide Full Article

If you're interested in broad exposure to the Energy - Exploration segment of the equity market, look no further than the Invesco Dynamic Energy Exploration & Production ETF (PXE - Free Report) , a passively managed exchange traded fund launched on 10/26/2005.

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Energy - Exploration is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 3, placing it in top 19%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $206.37 million, making it one of the average sized ETFs attempting to match the performance of the Energy - Exploration segment of the equity market. PXE seeks to match the performance of the Dynamic Energy Exploration & Production Intellidex Index before fees and expenses.

The Dynamic Energy Exploration & Production Intellidex Index is composed of stocks of 30 U.S. companies involved in the exploration and production of natural resources used to produce energy.

Costs

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.

Annual operating expenses for this ETF are 0.63%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 1.48%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Energy sector--about 100% of the portfolio.

Looking at individual holdings, Coterra Energy Inc (CTRA - Free Report) accounts for about 5.96% of total assets, followed by Occidental Petroleum Corp (OXY - Free Report) and Eog Resources Inc (EOG - Free Report) .

The top 10 holdings account for about 46.55% of total assets under management.

Performance and Risk

Year-to-date, the Invesco Dynamic Energy Exploration & Production ETF has added roughly 20.29% so far, and was up about 69.83% over the last 12 months (as of 03/01/2022). PXE has traded between $13.93 and $24.25 in this past 52-week period.

The ETF has a beta of 2.06 and standard deviation of 49.45% for the trailing three-year period, making it a high risk choice in the space. With about 31 holdings, it has more concentrated exposure than peers.

Alternatives

Invesco Dynamic Energy Exploration & Production ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, PXE is a sufficient option for those seeking exposure to the Energy ETFs area of the market. Investors might also want to consider some other ETF options in the space.

IShares U.S. Oil & Gas Exploration & Production ETF (IEO - Free Report) tracks Dow Jones U.S. Select Oil Exploration & Production Index and the SPDR S&P Oil & Gas Exploration & Production ETF (XOP - Free Report) tracks S&P Oil & Gas Exploration & Production Select Industry Index. IShares U.S. Oil & Gas Exploration & Production ETF has $653.35 million in assets, SPDR S&P Oil & Gas Exploration & Production ETF has $4.34 billion. IEO has an expense ratio of 0.42% and XOP charges 0.35%.

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.

Published in