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Is Invesco Dynamic Software ETF (PSJ) a Strong ETF Right Now?
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The Invesco Dynamic Software ETF made its debut on 06/23/2005, and is a smart beta exchange traded fund that provides broad exposure to the Technology ETFs 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.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
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 sponsored by Invesco. It has amassed assets over $227.89 million, making it one of the average sized ETFs in the Technology ETFs. PSJ, before fees and expenses, seeks to match the performance of the Dynamic Software Intellidex Index.
The Dynamic Software Intellidex Index is comprised of stocks of software 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
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.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.56%.
It's 12-month trailing dividend yield comes in at 8.31%.
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.
PSJ's heaviest allocation is in the Information Technology sector, which is about 62.10% of the portfolio. Its Telecom and Healthcare round out the top three.
Looking at individual holdings, Cadence Design Systems Inc (CDNS - Free Report) accounts for about 5.85% of total assets, followed by Synopsys Inc (SNPS - Free Report) and Ss&c Technologies Holdings Inc (SSNC - Free Report) .
Its top 10 holdings account for approximately 47.25% of PSJ's total assets under management.
Performance and Risk
The ETF has lost about -24.49% and is down about -33.80% so far this year and in the past one year (as of 05/24/2022), respectively. PSJ has traded between $89.12 and $167.59 during this last 52-week period.
The fund has a beta of 1.03 and standard deviation of 30.10% for the trailing three-year period, which makes PSJ a high risk choice in this particular space. With about 30 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco Dynamic Software ETF is a reasonable option for investors seeking to outperform the Technology ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
SPDR S&P Software & Services ETF (XSW - Free Report) tracks S&P Software & Services Select Industry Index and the iShares Expanded TechSoftware Sector ETF (IGV - Free Report) tracks S&P North American Technology-Software Index. SPDR S&P Software & Services ETF has $246.15 million in assets, iShares Expanded TechSoftware Sector ETF has $4.30 billion. XSW has an expense ratio of 0.35% and IGV charges 0.43%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Technology ETFs.
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 Dynamic Software ETF (PSJ) a Strong ETF Right Now?
The Invesco Dynamic Software ETF made its debut on 06/23/2005, and is a smart beta exchange traded fund that provides broad exposure to the Technology ETFs 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.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
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 sponsored by Invesco. It has amassed assets over $227.89 million, making it one of the average sized ETFs in the Technology ETFs. PSJ, before fees and expenses, seeks to match the performance of the Dynamic Software Intellidex Index.
The Dynamic Software Intellidex Index is comprised of stocks of software 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
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.
With on par with most peer products in the space, this ETF has annual operating expenses of 0.56%.
It's 12-month trailing dividend yield comes in at 8.31%.
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.
PSJ's heaviest allocation is in the Information Technology sector, which is about 62.10% of the portfolio. Its Telecom and Healthcare round out the top three.
Looking at individual holdings, Cadence Design Systems Inc (CDNS - Free Report) accounts for about 5.85% of total assets, followed by Synopsys Inc (SNPS - Free Report) and Ss&c Technologies Holdings Inc (SSNC - Free Report) .
Its top 10 holdings account for approximately 47.25% of PSJ's total assets under management.
Performance and Risk
The ETF has lost about -24.49% and is down about -33.80% so far this year and in the past one year (as of 05/24/2022), respectively. PSJ has traded between $89.12 and $167.59 during this last 52-week period.
The fund has a beta of 1.03 and standard deviation of 30.10% for the trailing three-year period, which makes PSJ a high risk choice in this particular space. With about 30 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco Dynamic Software ETF is a reasonable option for investors seeking to outperform the Technology ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
SPDR S&P Software & Services ETF (XSW - Free Report) tracks S&P Software & Services Select Industry Index and the iShares Expanded TechSoftware Sector ETF (IGV - Free Report) tracks S&P North American Technology-Software Index. SPDR S&P Software & Services ETF has $246.15 million in assets, iShares Expanded TechSoftware Sector ETF has $4.30 billion. XSW has an expense ratio of 0.35% and IGV charges 0.43%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Technology ETFs.
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.