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Should You Invest in the Invesco S&P SmallCap Information Technology ETF (PSCT)?

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The Invesco S&P SmallCap Information Technology ETF (PSCT - Free Report) was launched on 04/07/2010, and is a passively managed exchange traded fund designed to offer broad exposure to the Technology - 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.

Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Technology - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 10, placing it in bottom 38%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $367.10 million, making it one of the average sized ETFs attempting to match the performance of the Technology - Broad segment of the equity market. PSCT seeks to match the performance of the S&P SmallCap 600 Capped Information Technology Index before fees and expenses.

The S&P SmallCap 600 Capped Information Technology Index measures the overall performance of common stocks of US information technology companies.

Costs

Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.

Annual operating expenses for this ETF are 0.29%, making it one of the least expensive products in the space.

Sector Exposure and Top Holdings

It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Information Technology sector--about 100% of the portfolio.

Looking at individual holdings, Rogers Corp (ROG - Free Report) accounts for about 4.02% of total assets, followed by Vonage Holdings Corp and Sps Commerce Inc (SPSC - Free Report) .

The top 10 holdings account for about 32.47% of total assets under management.

Performance and Risk

So far this year, PSCT has lost about -26.31%, and is down about -17.24% in the last one year (as of 07/12/2022). During this past 52-week period, the fund has traded between $110.62 and $156.65.

The ETF has a beta of 1.17 and standard deviation of 31.27% for the trailing three-year period, making it a high risk choice in the space. With about 68 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco S&P SmallCap Information Technology 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, PSCT is an excellent option for investors seeking exposure to the Technology ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.

Technology Select Sector SPDR ETF (XLK - Free Report) tracks Technology Select Sector Index and the Vanguard Information Technology ETF (VGT - Free Report) tracks MSCI US Investable Market Information Technology 25/50 Index. Technology Select Sector SPDR ETF has $39.23 billion in assets, Vanguard Information Technology ETF has $41.32 billion. XLK has an expense ratio of 0.10% and VGT charges 0.10%.

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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