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Is Invesco Dynamic Energy Exploration & Production ETF (PXE) a Strong ETF Right Now?
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Designed to provide broad exposure to the Energy ETFs category of the market, the Invesco Dynamic Energy Exploration & Production ETF (PXE - Free Report) is a smart beta exchange traded fund launched on 10/26/2005.
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.
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.
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.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by Invesco. PXE has been able to amass assets over $210.03 million, making it one of the average sized ETFs in the Energy ETFs. PXE, before fees and expenses, seeks to match the performance of the Dynamic Energy Exploration & Production Intellidex Index.
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.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.63%.
The fund has a 12-month trailing dividend yield of 1.45%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 100% of the portfolio, the fund has heaviest allocation to the Energy sector.
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) .
PXE's top 10 holdings account for about 46.55% of its total assets under management.
Performance and Risk
Year-to-date, the Invesco Dynamic Energy Exploration & Production ETF return is roughly 22.42% so far, and is up about 69.63% over the last 12 months (as of 03/02/2022). PXE has traded between $13.93 and $24.68 in this past 52-week period.
The ETF has a beta of 2.07 and standard deviation of 49.44% 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 is a reasonable option for investors seeking to outperform the Energy ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
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 $658 million in assets, SPDR S&P Oil & Gas Exploration & Production ETF has $4.51 billion. IEO has an expense ratio of 0.42% and XOP charges 0.35%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Energy 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.
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Is Invesco Dynamic Energy Exploration & Production ETF (PXE) a Strong ETF Right Now?
Designed to provide broad exposure to the Energy ETFs category of the market, the Invesco Dynamic Energy Exploration & Production ETF (PXE - Free Report) is a smart beta exchange traded fund launched on 10/26/2005.
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.
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.
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.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by Invesco. PXE has been able to amass assets over $210.03 million, making it one of the average sized ETFs in the Energy ETFs. PXE, before fees and expenses, seeks to match the performance of the Dynamic Energy Exploration & Production Intellidex Index.
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.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.63%.
The fund has a 12-month trailing dividend yield of 1.45%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Representing 100% of the portfolio, the fund has heaviest allocation to the Energy sector.
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) .
PXE's top 10 holdings account for about 46.55% of its total assets under management.
Performance and Risk
Year-to-date, the Invesco Dynamic Energy Exploration & Production ETF return is roughly 22.42% so far, and is up about 69.63% over the last 12 months (as of 03/02/2022). PXE has traded between $13.93 and $24.68 in this past 52-week period.
The ETF has a beta of 2.07 and standard deviation of 49.44% 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 is a reasonable option for investors seeking to outperform the Energy ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
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 $658 million in assets, SPDR S&P Oil & Gas Exploration & Production ETF has $4.51 billion. IEO has an expense ratio of 0.42% and XOP charges 0.35%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Energy 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.