Making its debut on 06/23/2005, smart beta exchange traded fund Invesco Dynamic Leisure and Entertainment ETF (
PEJ Quick Quote PEJ - Free Report) provides investors broad exposure to the Consumer Discretionary 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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
Managed by Invesco, PEJ has amassed assets over $601.70 million, making it one of the largest ETFs in the Consumer Discretionary ETFs. This particular fund seeks to match the performance of the Dynamic Leisure & Entertainment Intellidex Index before fees and expenses.
The Dynamic Leisure & Entertainment Intellidex Index is comprised of stocks of U.S. leisure and entertainment 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 0.55%.
PEJ's 12-month trailing dividend yield is 0.52%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
For PEJ, it has heaviest allocation in the Consumer Discretionary sector --about 56.70% of the portfolio --while Telecom and Consumer Staples round out the top three.
Looking at individual holdings, Sysco Corp (
SYY Quick Quote SYY - Free Report) accounts for about 5.17% of total assets, followed by Liberty Media Corp-Liberty Formula One ( FWONA Quick Quote FWONA - Free Report) and Live Nation Entertainment Inc ( LYV Quick Quote LYV - Free Report) .
The top 10 holdings account for about 46.79% of total assets under management.
Performance and Risk
The ETF has lost about -21% so far this year and is down about -19.71% in the last one year (as of 11/28/2022). In the past 52-week period, it has traded between $34.60 and $50.75.
The fund has a beta of 1.28 and standard deviation of 36.26% for the trailing three-year period, which makes PEJ a high risk choice in this particular space. With about 31 holdings, it has more concentrated exposure than peers.
Invesco Dynamic Leisure and Entertainment ETF is an excellent option for investors seeking to outperform the Consumer Discretionary ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
Global X Video Games & Esports ETF (
HERO Quick Quote HERO - Free Report) tracks SOLACTIVE VIDEO GAMES & ESPORTS INDEX and the VanEck Video Gaming and eSports ETF ( ESPO Quick Quote ESPO - Free Report) tracks MVIS GLOBAL VIDEO GAMING AND ESPORTS IND. Global X Video Games & Esports ETF has $172.05 million in assets, VanEck Video Gaming and eSports ETF has $260.31 million. HERO has an expense ratio of 0.50% and ESPO charges 0.55%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Consumer Discretionary ETFs.
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.