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Is Invesco Defensive Equity ETF (DEF) a Strong ETF Right Now?
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Launched on 12/15/2006, the Invesco Defensive Equity ETF is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Growth category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
A good option for investors who believe in market efficiency, market cap weighted indexes offer 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.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is managed by Invesco. DEF has been able to amass assets over $300.65 million, making it one of the average sized ETFs in the Style Box - Large Cap Growth. This particular fund seeks to match the performance of the Guggenheim Defensive Equity Index before fees and expenses.
The Invesco Defensive Equity Index is designed to provide exposure to securities of large-cap US issuers.
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 0.53%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.14%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
DEF's heaviest allocation is in the Healthcare sector, which is about 24.80% of the portfolio. Its Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Norfolk Southern Corp (NSC - Free Report) accounts for about 1.18% of total assets, followed by Merck & Co Inc (MRK - Free Report) and Intercontinental Exchange Inc (ICE - Free Report) .
DEF's top 10 holdings account for about 11.46% of its total assets under management.
Performance and Risk
So far this year, DEF has lost about -5.69%, and is up roughly 15.18% in the last one year (as of 02/17/2022). During this past 52-week period, the fund has traded between $56.49 and $73.11.
DEF has a beta of 0.89 and standard deviation of 21.19% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 101 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco Defensive Equity ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Growth ETF (VUG - Free Report) tracks CRSP U.S. Large Cap Growth Index and the Invesco QQQ (QQQ - Free Report) tracks NASDAQ-100 Index. Vanguard Growth ETF has $80.63 billion in assets, Invesco QQQ has $187.38 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.
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 - Large Cap Growth.
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 Defensive Equity ETF (DEF) a Strong ETF Right Now?
Launched on 12/15/2006, the Invesco Defensive Equity ETF is a smart beta exchange traded fund offering broad exposure to the Style Box - Large Cap Growth category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
A good option for investors who believe in market efficiency, market cap weighted indexes offer 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.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is managed by Invesco. DEF has been able to amass assets over $300.65 million, making it one of the average sized ETFs in the Style Box - Large Cap Growth. This particular fund seeks to match the performance of the Guggenheim Defensive Equity Index before fees and expenses.
The Invesco Defensive Equity Index is designed to provide exposure to securities of large-cap US issuers.
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 0.53%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.14%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
DEF's heaviest allocation is in the Healthcare sector, which is about 24.80% of the portfolio. Its Industrials and Consumer Discretionary round out the top three.
Looking at individual holdings, Norfolk Southern Corp (NSC - Free Report) accounts for about 1.18% of total assets, followed by Merck & Co Inc (MRK - Free Report) and Intercontinental Exchange Inc (ICE - Free Report) .
DEF's top 10 holdings account for about 11.46% of its total assets under management.
Performance and Risk
So far this year, DEF has lost about -5.69%, and is up roughly 15.18% in the last one year (as of 02/17/2022). During this past 52-week period, the fund has traded between $56.49 and $73.11.
DEF has a beta of 0.89 and standard deviation of 21.19% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 101 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco Defensive Equity ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Growth ETF (VUG - Free Report) tracks CRSP U.S. Large Cap Growth Index and the Invesco QQQ (QQQ - Free Report) tracks NASDAQ-100 Index. Vanguard Growth ETF has $80.63 billion in assets, Invesco QQQ has $187.38 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.
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 - Large Cap Growth.
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.