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Is Invesco Dynamic Energy Exploration & Production ETF (PXE) a Strong ETF Right Now?
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A smart beta exchange traded fund, the Invesco Dynamic Energy Exploration & Production ETF (PXE - Free Report) debuted on 10/26/2005, and offers broad exposure to the Energy ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide 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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
PXE is managed by Invesco, and this fund has amassed over $301.75 million, which makes it one of the average sized ETFs in the Energy ETFs. Before fees and expenses, this particular fund 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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for PXE are 0.63%, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.84%.
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.
PXE's heaviest allocation is in the Energy sector, which is about 97.10% of the portfolio.
When you look at individual holdings, Occidental Petroleum Corp (OXY - Free Report) accounts for about 5.03% of the fund's total assets, followed by Diamondback Energy Inc (FANG - Free Report) and Marathon Petroleum Corp (MPC - Free Report) .
The top 10 holdings account for about 45.15% of total assets under management.
Performance and Risk
So far this year, PXE return is roughly 57.17%, and was up about 94.51% in the last one year (as of 09/13/2022). During this past 52-week period, the fund has traded between $16.61 and $36.33.
The fund has a beta of 1.89 and standard deviation of 51.53% for the trailing three-year period, which makes PXE a high risk choice in this particular 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 $1.01 billion in assets, SPDR S&P Oil & Gas Exploration & Production ETF has $4.68 billion. IEO has an expense ratio of 0.39% 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?
A smart beta exchange traded fund, the Invesco Dynamic Energy Exploration & Production ETF (PXE - Free Report) debuted on 10/26/2005, and offers broad exposure to the Energy ETFs category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide 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.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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
PXE is managed by Invesco, and this fund has amassed over $301.75 million, which makes it one of the average sized ETFs in the Energy ETFs. Before fees and expenses, this particular fund 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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for PXE are 0.63%, which makes it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.84%.
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.
PXE's heaviest allocation is in the Energy sector, which is about 97.10% of the portfolio.
When you look at individual holdings, Occidental Petroleum Corp (OXY - Free Report) accounts for about 5.03% of the fund's total assets, followed by Diamondback Energy Inc (FANG - Free Report) and Marathon Petroleum Corp (MPC - Free Report) .
The top 10 holdings account for about 45.15% of total assets under management.
Performance and Risk
So far this year, PXE return is roughly 57.17%, and was up about 94.51% in the last one year (as of 09/13/2022). During this past 52-week period, the fund has traded between $16.61 and $36.33.
The fund has a beta of 1.89 and standard deviation of 51.53% for the trailing three-year period, which makes PXE a high risk choice in this particular 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 $1.01 billion in assets, SPDR S&P Oil & Gas Exploration & Production ETF has $4.68 billion. IEO has an expense ratio of 0.39% 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.