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Should Invesco Dividend Achievers ETF (PFM) Be on Your Investing Radar?

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Launched on 09/15/2005, the Invesco Dividend Achievers ETF (PFM - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Large Cap Value segment of the US equity market.

The fund is sponsored by Invesco. It has amassed assets over $668.24 million, making it one of the average sized ETFs attempting to match the Large Cap Value segment of the US equity market.

Why Large Cap Value

Large cap companies typically have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.

Value stocks are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their lower than average sales and earnings growth rates. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. They are however likely to underperform growth stocks in strong bull markets.

Costs

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts in the long term if all other factors remain equal.

Annual operating expenses for this ETF are 0.53%, making it one of the more expensive products in the space.

It has a 12-month trailing dividend yield of 1.58%.

Sector Exposure and Top Holdings

While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation to the Information Technology sector--about 17.20% of the portfolio. Healthcare and Consumer Staples round out the top three.

Looking at individual holdings, Microsoft Corp (MSFT - Free Report) accounts for about 4.44% of total assets, followed by Jpmorgan Chase & Co (JPM - Free Report) and Johnson & Johnson (JNJ - Free Report) .

The top 10 holdings account for about 26.34% of total assets under management.

Performance and Risk

PFM seeks to match the performance of the NASDAQ US Broad Dividend Achievers Index before fees and expenses. The NASDAQ US Broad Dividend Achievers Index is designed to identify a diversified group of dividend-paying companies which have increased their annual dividend for 10 or more consecutive fiscal years.

The ETF return is roughly 17.15% so far this year and is up about 26.15% in the last one year (as of 08/23/2021). In the past 52-week period, it has traded between $29.45 and $38.

The ETF has a beta of 0.85 and standard deviation of 20.15% for the trailing three-year period, making it a medium risk choice in the space. With about 352 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco Dividend Achievers 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, PFM is a great option for investors seeking exposure to the Style Box - Large Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.

The iShares Russell 1000 Value ETF (IWD - Free Report) and the Vanguard Value ETF (VTV - Free Report) track a similar index. While iShares Russell 1000 Value ETF has $54.66 billion in assets, Vanguard Value ETF has $84.02 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.

Bottom-Line

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

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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