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Is Invesco High Yield Equity Dividend Achievers ETF (PEY) a Strong ETF Right Now?
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Designed to provide broad exposure to the Style Box - All Cap Value category of the market, the Invesco High Yield Equity Dividend Achievers ETF (PEY - Free Report) is a smart beta exchange traded fund launched on 12/09/2004.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
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.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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
The fund is managed by Invesco. PEY has been able to amass assets over $1.44 billion, making it one of the largest ETFs in the Style Box - All Cap Value. PEY, before fees and expenses, seeks to match the performance of the NASDAQ US Dividend Achievers 50 Index.
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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.52% for PEY, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 4.48%.
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.
PEY's heaviest allocation is in the Utilities sector, which is about 23.50% of the portfolio. Its Financials and Consumer Staples round out the top three.
Looking at individual holdings, Altria Group Inc (MO - Free Report) accounts for about 3.97% of total assets, followed by Telephone And Data Systems Inc (TDS - Free Report) and Verizon Communications Inc (VZ - Free Report) .
Its top 10 holdings account for approximately 28.6% of PEY's total assets under management.
Performance and Risk
The ETF has lost about -6.01% and is down about -4.79% so far this year and in the past one year (as of 03/14/2023), respectively. PEY has traded between $18.59 and $22.48 during this last 52-week period.
PEY has a beta of 0.87 and standard deviation of 24.72% 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 an excellent option for investors seeking to outperform the Style Box - All Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
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 $7.49 billion in assets, iShares Core S&P U.S. Value ETF has $12.48 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?
Designed to provide broad exposure to the Style Box - All Cap Value category of the market, the Invesco High Yield Equity Dividend Achievers ETF (PEY - Free Report) is a smart beta exchange traded fund launched on 12/09/2004.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
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.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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
The fund is managed by Invesco. PEY has been able to amass assets over $1.44 billion, making it one of the largest ETFs in the Style Box - All Cap Value. PEY, before fees and expenses, seeks to match the performance of the NASDAQ US Dividend Achievers 50 Index.
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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.52% for PEY, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 4.48%.
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.
PEY's heaviest allocation is in the Utilities sector, which is about 23.50% of the portfolio. Its Financials and Consumer Staples round out the top three.
Looking at individual holdings, Altria Group Inc (MO - Free Report) accounts for about 3.97% of total assets, followed by Telephone And Data Systems Inc (TDS - Free Report) and Verizon Communications Inc (VZ - Free Report) .
Its top 10 holdings account for approximately 28.6% of PEY's total assets under management.
Performance and Risk
The ETF has lost about -6.01% and is down about -4.79% so far this year and in the past one year (as of 03/14/2023), respectively. PEY has traded between $18.59 and $22.48 during this last 52-week period.
PEY has a beta of 0.87 and standard deviation of 24.72% 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 an excellent option for investors seeking to outperform the Style Box - All Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
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 $7.49 billion in assets, iShares Core S&P U.S. Value ETF has $12.48 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.