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Is Invesco High Yield Equity Dividend Achievers ETF (PEY) a Strong ETF Right Now?
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A smart beta exchange traded fund, the Invesco High Yield Equity Dividend Achievers ETF (PEY - Free Report) debuted on 12/09/2004, and offers broad exposure to the Style Box - All Cap Value category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
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
PEY is managed by Invesco, and this fund has amassed over $1.24 billion, which makes it one of the largest ETFs in the Style Box - All Cap Value. Before fees and expenses, PEY 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.
Annual operating expenses for this ETF are 0.52%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 4.86%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For PEY, it has heaviest allocation in the Financials sector --about 27.60% of the portfolio --while Utilities and Consumer Staples round out the top three.
When you look at individual holdings, Walgreens Boots Alliance Inc (WBA - Free Report) accounts for about 4.30% of the fund's total assets, followed by Nu Skin Enterprises Inc (NUS - Free Report) and Kennedy-Wilson Holdings Inc (KW - Free Report) .
Its top 10 holdings account for approximately 30.57% of PEY's total assets under management.
Performance and Risk
The ETF has lost about -1.17% so far this year and was up about 11.61% in the last one year (as of 03/29/2024). In the past 52-week period, it has traded between $18 and $21.39.
PEY has a beta of 0.88 and standard deviation of 16.48% 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 $10.04 billion in assets, iShares Core S&P U.S. Value ETF has $16.96 billion. DFAT has an expense ratio of 0.28% 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?
A smart beta exchange traded fund, the Invesco High Yield Equity Dividend Achievers ETF (PEY - Free Report) debuted on 12/09/2004, and offers broad exposure to the Style Box - All Cap Value category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
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
PEY is managed by Invesco, and this fund has amassed over $1.24 billion, which makes it one of the largest ETFs in the Style Box - All Cap Value. Before fees and expenses, PEY 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.
Annual operating expenses for this ETF are 0.52%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 4.86%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
For PEY, it has heaviest allocation in the Financials sector --about 27.60% of the portfolio --while Utilities and Consumer Staples round out the top three.
When you look at individual holdings, Walgreens Boots Alliance Inc (WBA - Free Report) accounts for about 4.30% of the fund's total assets, followed by Nu Skin Enterprises Inc (NUS - Free Report) and Kennedy-Wilson Holdings Inc (KW - Free Report) .
Its top 10 holdings account for approximately 30.57% of PEY's total assets under management.
Performance and Risk
The ETF has lost about -1.17% so far this year and was up about 11.61% in the last one year (as of 03/29/2024). In the past 52-week period, it has traded between $18 and $21.39.
PEY has a beta of 0.88 and standard deviation of 16.48% 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 $10.04 billion in assets, iShares Core S&P U.S. Value ETF has $16.96 billion. DFAT has an expense ratio of 0.28% 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.