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Is Invesco Dynamic Energy Exploration & Production ETF (PXE) a Strong ETF Right Now?
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The Invesco Dynamic Energy Exploration & Production ETF (PXE - Free Report) was launched on 10/26/2005, and is a smart beta exchange traded fund designed to offer broad exposure to the Energy ETFs 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.
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.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
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
PXE is managed by Invesco, and this fund has amassed over $264.38 million, which makes it one of the average sized ETFs in the Energy ETFs. This particular fund 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.
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.
Annual operating expenses for PXE are 0.63%, which makes it on par with most peer products in the space.
PXE's 12-month trailing dividend yield is 2.36%.
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.
Representing 97.20% of the portfolio, the fund has heaviest allocation to the Energy sector.
Taking into account individual holdings, Occidental Petroleum Corp (OXY - Free Report) accounts for about 6.34% of the fund's total assets, followed by Conocophillips (COP - Free Report) and Devon Energy Corp (DVN - Free Report) .
The top 10 holdings account for about 45.02% of total assets under management.
Performance and Risk
The ETF has added about 22.84% so far this year and was up about 34.14% in the last one year (as of 07/06/2022). In the past 52-week period, it has traded between $14.29 and $36.33.
The ETF has a beta of 1.96 and standard deviation of 51.24% for the trailing three-year period, making it a high risk choice in the space. With about 32 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco Dynamic Energy Exploration & Production ETF is an excellent option for investors seeking to outperform the Energy ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
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 $797.04 million in assets, SPDR S&P Oil & Gas Exploration & Production ETF has $4.03 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?
The Invesco Dynamic Energy Exploration & Production ETF (PXE - Free Report) was launched on 10/26/2005, and is a smart beta exchange traded fund designed to offer broad exposure to the Energy ETFs 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.
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.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
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
PXE is managed by Invesco, and this fund has amassed over $264.38 million, which makes it one of the average sized ETFs in the Energy ETFs. This particular fund 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.
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.
Annual operating expenses for PXE are 0.63%, which makes it on par with most peer products in the space.
PXE's 12-month trailing dividend yield is 2.36%.
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.
Representing 97.20% of the portfolio, the fund has heaviest allocation to the Energy sector.
Taking into account individual holdings, Occidental Petroleum Corp (OXY - Free Report) accounts for about 6.34% of the fund's total assets, followed by Conocophillips (COP - Free Report) and Devon Energy Corp (DVN - Free Report) .
The top 10 holdings account for about 45.02% of total assets under management.
Performance and Risk
The ETF has added about 22.84% so far this year and was up about 34.14% in the last one year (as of 07/06/2022). In the past 52-week period, it has traded between $14.29 and $36.33.
The ETF has a beta of 1.96 and standard deviation of 51.24% for the trailing three-year period, making it a high risk choice in the space. With about 32 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco Dynamic Energy Exploration & Production ETF is an excellent option for investors seeking to outperform the Energy ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
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 $797.04 million in assets, SPDR S&P Oil & Gas Exploration & Production ETF has $4.03 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.