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Is Invesco High Yield Equity Dividend Achievers ETF (PEY) a Strong ETF Right Now?
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The Invesco High Yield Equity Dividend Achievers ETF (PEY - Free Report) made its debut on 12/09/2004, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - All Cap Value 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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
Managed by Invesco, PEY has amassed assets over $1.15 billion, making it one of the largest ETFs in the Style Box - All Cap Value. PEY seeks to match the performance of the NASDAQ US Dividend Achievers 50 Index before fees and expenses.
The NASDAQ US Dividend Achievers 50 Index is comprised of 50 stocks selected principally on the basis of dividend yield and consistent growth in dividends.
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.
Operating expenses on an annual basis are 0.53% for PEY, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 3.96%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Utilities sector - about 24.70% of the portfolio. Financials and Consumer Staples round out the top three.
When you look at individual holdings, Altria Group Inc (MO - Free Report) accounts for about 4.18% of the fund's total assets, followed by At&t Inc (T - Free Report) and Universal Corp/va (UVV - Free Report) .
The top 10 holdings account for about 31.66% of total assets under management.
Performance and Risk
Year-to-date, the Invesco High Yield Equity Dividend Achievers ETF has added roughly 0.27% so far, and it's up approximately 5.77% over the last 12 months (as of 05/03/2022). PEY has traded between $19.38 and $22.48 in this past 52-week period.
The fund has a beta of 0.90 and standard deviation of 26.19% for the trailing three-year period, which makes PEY a medium risk choice in this particular space. With about 51 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco High Yield Equity Dividend Achievers ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
Dimensional U.S. Targeted Value ETF (DFAT - Free Report) tracks ---------------------------------------- and the iShares Core S&P U.S. Value ETF (IUSV - Free Report) tracks S&P 900 Value Index. Dimensional U.S. Targeted Value ETF has $6.60 billion in assets, iShares Core S&P U.S. Value ETF has $11.55 billion. DFAT has an expense ratio of 0.34% and IUSV charges 0.04%.
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 - All Cap Value.
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 High Yield Equity Dividend Achievers ETF (PEY) a Strong ETF Right Now?
The Invesco High Yield Equity Dividend Achievers ETF (PEY - Free Report) made its debut on 12/09/2004, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - All Cap Value 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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
Managed by Invesco, PEY has amassed assets over $1.15 billion, making it one of the largest ETFs in the Style Box - All Cap Value. PEY seeks to match the performance of the NASDAQ US Dividend Achievers 50 Index before fees and expenses.
The NASDAQ US Dividend Achievers 50 Index is comprised of 50 stocks selected principally on the basis of dividend yield and consistent growth in dividends.
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.
Operating expenses on an annual basis are 0.53% for PEY, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 3.96%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Utilities sector - about 24.70% of the portfolio. Financials and Consumer Staples round out the top three.
When you look at individual holdings, Altria Group Inc (MO - Free Report) accounts for about 4.18% of the fund's total assets, followed by At&t Inc (T - Free Report) and Universal Corp/va (UVV - Free Report) .
The top 10 holdings account for about 31.66% of total assets under management.
Performance and Risk
Year-to-date, the Invesco High Yield Equity Dividend Achievers ETF has added roughly 0.27% so far, and it's up approximately 5.77% over the last 12 months (as of 05/03/2022). PEY has traded between $19.38 and $22.48 in this past 52-week period.
The fund has a beta of 0.90 and standard deviation of 26.19% for the trailing three-year period, which makes PEY a medium risk choice in this particular space. With about 51 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco High Yield Equity Dividend Achievers ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
Dimensional U.S. Targeted Value ETF (DFAT - Free Report) tracks ---------------------------------------- and the iShares Core S&P U.S. Value ETF (IUSV - Free Report) tracks S&P 900 Value Index. Dimensional U.S. Targeted Value ETF has $6.60 billion in assets, iShares Core S&P U.S. Value ETF has $11.55 billion. DFAT has an expense ratio of 0.34% and IUSV charges 0.04%.
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 - All Cap Value.
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.