A smart beta exchange traded fund, the Invesco Dynamic Leisure and Entertainment ETF (
PEJ Quick Quote PEJ - Free Report) debuted on 06/23/2005, and offers broad exposure to the Consumer Discretionary ETFs 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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
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
Managed by Invesco, PEJ has amassed assets over $1.77 billion, making it one of the largest ETFs in the Consumer Discretionary ETFs. Before fees and expenses, this particular fund seeks to match the performance of the Dynamic Leisure & Entertainment Intellidex Index.
The index is comprised of stocks of U.S. leisure and entertainment companies. The Index is designed to provide capital appreciation by thoroughly evaluating companies based on a variety of investment merit criteria, including fundamental growth, stock valuation, investment timeliness and risk factors.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Annual operating expenses for this ETF are 0.63%, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 0.70%.
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.
This ETF has heaviest allocation in the Telecom sector - about 49.40% of the portfolio. Consumer Discretionary and Consumer Staples round out the top three.
Looking at individual holdings, Viacomcbs Inc (
VIAC Quick Quote VIAC - Free Report) accounts for about 7.26% of total assets, followed by Discovery Inc ( DISCA Quick Quote DISCA - Free Report) and Airbnb Inc ( ABNB Quick Quote ABNB - Free Report) .
PEJ's top 10 holdings account for about 47.38% of its total assets under management.
Performance and Risk
The ETF has gained about 17.23% and is up roughly 75.09% so far this year and in the past one year (as of 05/04/2021), respectively. PEJ has traded between $24.84 and $54.78 during this last 52-week period.
PEJ has a beta of 1.42 and standard deviation of 31.66% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 32 holdings, it has more concentrated exposure than peers.
Invesco Dynamic Leisure and Entertainment ETF is a reasonable option for investors seeking to outperform the Consumer Discretionary ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Global X Video Games & Esports ETF (
HERO Quick Quote HERO - Free Report) tracks SOLACTIVE VIDEO GAMES & ESPORTS INDEX and the VanEck Vectors Video Gaming and eSports ETF ( ESPO Quick Quote ESPO - Free Report) tracks MVIS GLOBAL VIDEO GAMING AND ESPORTS IND. Global X Video Games & Esports ETF has $695.51 million in assets, VanEck Vectors Video Gaming and eSports ETF has $832.58 million. HERO has an expense ratio of 0.50% and ESPO charges 0.55%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Consumer Discretionary ETFs.
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.