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Is Invesco High Yield Equity Dividend Achievers ETF (PEY) a Strong ETF Right Now?
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Making its debut on 12/09/2004, smart beta exchange traded fund Invesco High Yield Equity Dividend Achievers ETF (PEY - Free Report) provides investors broad exposure to the Style Box - All Cap Value 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 offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
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.
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. PEY has been able to amass assets over $1.40 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
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 this ETF are 0.52%, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 4.08%.
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.
This ETF has heaviest allocation in the Financials sector - about 28.40% of the portfolio. Utilities and Consumer Staples round out the top three.
Taking into account individual holdings, Northwest Bancshares Inc (NWBI - Free Report) accounts for about 3.61% of the fund's total assets, followed by Altria Group Inc (MO - Free Report) and International Business Machines Corp (IBM - Free Report) .
Its top 10 holdings account for approximately 22.6% of PEY's total assets under management.
Performance and Risk
So far this year, PEY has lost about -0.47%, and is up about 2.43% in the last one year (as of 11/08/2022). During this past 52-week period, the fund has traded between $18.59 and $22.48.
PEY has a beta of 0.89 and standard deviation of 26.90% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 52 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 $7.23 billion in assets, iShares Core S&P U.S. Value ETF has $12.20 billion. DFAT has an expense ratio of 0.29% 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?
Making its debut on 12/09/2004, smart beta exchange traded fund Invesco High Yield Equity Dividend Achievers ETF (PEY - Free Report) provides investors broad exposure to the Style Box - All Cap Value 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 offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
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.
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. PEY has been able to amass assets over $1.40 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
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 this ETF are 0.52%, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 4.08%.
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.
This ETF has heaviest allocation in the Financials sector - about 28.40% of the portfolio. Utilities and Consumer Staples round out the top three.
Taking into account individual holdings, Northwest Bancshares Inc (NWBI - Free Report) accounts for about 3.61% of the fund's total assets, followed by Altria Group Inc (MO - Free Report) and International Business Machines Corp (IBM - Free Report) .
Its top 10 holdings account for approximately 22.6% of PEY's total assets under management.
Performance and Risk
So far this year, PEY has lost about -0.47%, and is up about 2.43% in the last one year (as of 11/08/2022). During this past 52-week period, the fund has traded between $18.59 and $22.48.
PEY has a beta of 0.89 and standard deviation of 26.90% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 52 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 $7.23 billion in assets, iShares Core S&P U.S. Value ETF has $12.20 billion. DFAT has an expense ratio of 0.29% 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.