The Invesco DWA Basic Materials Momentum ETF (
PYZ Quick Quote PYZ - Free Report) was launched on 10/12/2006, and is a passively managed exchange traded fund designed to offer broad exposure to the Materials - Broad segment of the equity market.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Investor-friendly, sector ETFs provide many options to gain low risk and diversified exposure to a broad group of companies in particular sectors. Materials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 7, placing it in top 44%.
The fund is sponsored by Invesco. It has amassed assets over $212.58 million, making it one of the average sized ETFs attempting to match the performance of the Materials - Broad segment of the equity market. PYZ seeks to match the performance of the DWA Basic Materials Technical Leaders Index before fees and expenses.
The DWA Basic Materials Technical Leaders Index identifies companies that show relative strength and are composed of at least 30 common stocks from a universe of approximately 3,000 common stocks traded on US exchanges.
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 0.60%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.67%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Materials sector--about 90.70% of the portfolio.
Looking at individual holdings, Freeport-Mcmoran Inc (
FCX Quick Quote FCX - Free Report) accounts for about 4.86% of total assets, followed by Avery Dennison Corp ( AVY Quick Quote AVY - Free Report) and Alcoa Corp ( AA Quick Quote AA - Free Report) .
The top 10 holdings account for about 40.83% of total assets under management.
Performance and Risk
The ETF has added roughly 30.91% so far this year and it's up approximately 81.46% in the last one year (as of 05/31/2021). In that past 52-week period, it has traded between $48.80 and $94.07.
The ETF has a beta of 1.40 and standard deviation of 31.54% for the trailing three-year period, making it a high risk choice in the space. With about 31 holdings, it has more concentrated exposure than peers.
Invesco DWA Basic Materials Momentum ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, PYZ is a great option for investors seeking exposure to the Materials ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
FlexShares Morningstar Global Upstream Natural Resources ETF (
GUNR Quick Quote GUNR - Free Report) tracks Morningstar Global Upstream Natural Resources Index and the Materials Select Sector SPDR ETF ( XLB Quick Quote XLB - Free Report) tracks Materials Select Sector Index. FlexShares Morningstar Global Upstream Natural Resources ETF has $5.47 billion in assets, Materials Select Sector SPDR ETF has $9.65 billion. GUNR has an expense ratio of 0.46% and XLB charges 0.12%. Bottom Line
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