Looking for broad exposure to the Large Cap Value segment of the US equity market? You should consider the Invesco Dividend Achievers ETF (
PFM Quick Quote PFM - Free Report) , a passively managed exchange traded fund launched on 09/15/2005.
The fund is sponsored by Invesco. It has amassed assets over $730.22 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
Companies that fall in the large cap category tend to have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.
Value stocks have lower than average price-to-earnings and price-to-book ratios. They also have lower than average sales and earnings growth rates. When you look at long-term performance, value stocks have outperformed growth stocks in nearly all markets. But in strong bull markets, growth stocks are more likely to be winners.
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 0.53%, making it one of the more expensive products in the space.
It has a 12-month trailing dividend yield of 1.96%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Healthcare sector--about 16.10% of the portfolio. Information Technology and Consumer Staples round out the top three.
Looking at individual holdings, Microsoft Corp (
MSFT Quick Quote MSFT - Free Report) accounts for about 4.12% of total assets, followed by Johnson & Johnson ( JNJ Quick Quote JNJ - Free Report) and Unitedhealth Group Inc ( UNH Quick Quote UNH - Free Report) .
The top 10 holdings account for about 25.45% 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 has lost about -4.20% so far this year and was up about 1.79% in the last one year (as of 08/15/2022). In the past 52-week period, it has traded between $33.37 and $39.94.
The ETF has a beta of 0.82 and standard deviation of 20.85% for the trailing three-year period, making it a medium risk choice in the space. With about 374 holdings, it effectively diversifies company-specific risk.
Invesco Dividend Achievers ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, PFM is a reasonable option for those seeking exposure to the Style Box - Large Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 1000 Value ETF (
IWD Quick Quote IWD - Free Report) and the Vanguard Value ETF ( VTV Quick Quote VTV - Free Report) track a similar index. While iShares Russell 1000 Value ETF has $55.40 billion in assets, Vanguard Value ETF has $101.14 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.