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Is Invesco DB Energy Fund (DBE) a Hot ETF Right Now?
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Designed to provide broad exposure to the Energy ETFs category of the U.S. equity market, the Invesco DB Energy Fund (DBE - Free Report) is a smart beta exchange traded fund launched on 01/05/2007.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
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.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by Invesco, and has been able to amass over $221.10 M, which makes it the largest ETF in the Energy ETFs. This particular fund seeks to match the performance of the DBIQ Optimum Yield Energy Index Excess Return before fees and expenses.
The DBIQ Optimum Yield Energy Index Excess Return Index is a rules-based index composed of futures contracts on some of the most heavily traded energy commodities in the world: Light Sweet Crude Oil (WTI); Heating Oil; Brent Crude Oil; RBOB Gasoline; & Natural Gas. It is intended to reflect the performance of the energy sector.
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.
Operating expenses on an annual basis are 0.75% for this ETF, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
Taking into account individual holdings, United States Treasury Bill accounts for about 26.72% of the fund's total assets, followed by Nymex Light Sweet Crude Oil Future (CLH9) and United States Treasury Bill.
Its top 10 holdings account for approximately 192.8% of DBE's total assets under management.
Performance and Risk
DBE has added about 15.28% so far this year, and as of 07/03/2018, is up roughly 44.27% in the last one year. In the past 52-week period, the fund has traded between $11.19 and $17.29.
The ETF has a beta of 0.68 and standard deviation of 25.92% for the trailing three-year period, making it a high choice in the space. With about 12 holdings, it has more concentrated exposure than peers.
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 DB Energy Fund (DBE) a Hot ETF Right Now?
Designed to provide broad exposure to the Energy ETFs category of the U.S. equity market, the Invesco DB Energy Fund (DBE - Free Report) is a smart beta exchange traded fund launched on 01/05/2007.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
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.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is managed by Invesco, and has been able to amass over $221.10 M, which makes it the largest ETF in the Energy ETFs. This particular fund seeks to match the performance of the DBIQ Optimum Yield Energy Index Excess Return before fees and expenses.
The DBIQ Optimum Yield Energy Index Excess Return Index is a rules-based index composed of futures contracts on some of the most heavily traded energy commodities in the world: Light Sweet Crude Oil (WTI); Heating Oil; Brent Crude Oil; RBOB Gasoline; & Natural Gas. It is intended to reflect the performance of the energy sector.
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.
Operating expenses on an annual basis are 0.75% for this ETF, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
Taking into account individual holdings, United States Treasury Bill accounts for about 26.72% of the fund's total assets, followed by Nymex Light Sweet Crude Oil Future (CLH9) and United States Treasury Bill.
Its top 10 holdings account for approximately 192.8% of DBE's total assets under management.
Performance and Risk
DBE has added about 15.28% so far this year, and as of 07/03/2018, is up roughly 44.27% in the last one year. In the past 52-week period, the fund has traded between $11.19 and $17.29.
The ETF has a beta of 0.68 and standard deviation of 25.92% for the trailing three-year period, making it a high choice in the space. With about 12 holdings, it has more concentrated exposure than peers.
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.