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Is Invesco 130 Laddered Treasury ETF (PLW) a Strong ETF Right Now?
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The Invesco 130 Laddered Treasury ETF was launched on 10/11/2007, and is a smart beta exchange traded fund designed to offer broad exposure to the Government Bond ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option 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.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by Invesco. PLW has been able to amass assets over $518.18 million, making it one of the average sized ETFs in the Government Bond ETFs. Before fees and expenses, this particular fund seeks to match the performance of the Ryan/NASDAQ U.S. 1-30 Year Treasury Laddered Index.
The Ryan/NASDAQ U.S. 1-30 Year Treasury Laddered Index measures the potential returns of the U.S. Treasury yield curve based on approximately 30 equally weighted U.S. Treasury issues with fixed coupons, scheduled to mature in a proportional, annual sequential structure.
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.
Operating expenses on an annual basis are 0.25% for this ETF, which makes it one of the more expensive products in the space.
The fund has a 12-month trailing dividend yield of 1.80%.
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.
Taking into account individual holdings, United States Treasury Note/bond-4.50%-2-15-2036 accounts for about 9.50% of the fund's total assets, followed by United States Treasury Note/bond-5.38%-2-15-2031 and United States Treasury Note/bond-2.75%-2-15-2024.
The top 10 holdings account for about 45.61% of total assets under management.
Performance and Risk
The ETF has lost about -15.53% and is down about -17.23% so far this year and in the past one year (as of 12/19/2022), respectively. PLW has traded between $27.43 and $36.87 during this last 52-week period.
The ETF has a beta of 0 and standard deviation of 11.03% for the trailing three-year period, making it a high risk choice in the space. With about 28 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco 130 Laddered Treasury ETF is not a suitable option for investors seeking to outperform the Government Bond ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
IShares 1020 Year Treasury Bond ETF (TLH - Free Report) tracks ICE U.S Treasury 10-20 Year Bond Index and the iShares 20 Year Treasury Bond ETF (TLT - Free Report) tracks ICE U.S. Treasury 20+ Year Bond Index. IShares 1020 Year Treasury Bond ETF has $6.20 billion in assets, iShares 20 Year Treasury Bond ETF has $29.85 billion. TLH has an expense ratio of 0.15% and TLT charges 0.15%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Government Bond 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 130 Laddered Treasury ETF (PLW) a Strong ETF Right Now?
The Invesco 130 Laddered Treasury ETF was launched on 10/11/2007, and is a smart beta exchange traded fund designed to offer broad exposure to the Government Bond ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option 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.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is managed by Invesco. PLW has been able to amass assets over $518.18 million, making it one of the average sized ETFs in the Government Bond ETFs. Before fees and expenses, this particular fund seeks to match the performance of the Ryan/NASDAQ U.S. 1-30 Year Treasury Laddered Index.
The Ryan/NASDAQ U.S. 1-30 Year Treasury Laddered Index measures the potential returns of the U.S. Treasury yield curve based on approximately 30 equally weighted U.S. Treasury issues with fixed coupons, scheduled to mature in a proportional, annual sequential structure.
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.
Operating expenses on an annual basis are 0.25% for this ETF, which makes it one of the more expensive products in the space.
The fund has a 12-month trailing dividend yield of 1.80%.
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.
Taking into account individual holdings, United States Treasury Note/bond-4.50%-2-15-2036 accounts for about 9.50% of the fund's total assets, followed by United States Treasury Note/bond-5.38%-2-15-2031 and United States Treasury Note/bond-2.75%-2-15-2024.
The top 10 holdings account for about 45.61% of total assets under management.
Performance and Risk
The ETF has lost about -15.53% and is down about -17.23% so far this year and in the past one year (as of 12/19/2022), respectively. PLW has traded between $27.43 and $36.87 during this last 52-week period.
The ETF has a beta of 0 and standard deviation of 11.03% for the trailing three-year period, making it a high risk choice in the space. With about 28 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco 130 Laddered Treasury ETF is not a suitable option for investors seeking to outperform the Government Bond ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
IShares 1020 Year Treasury Bond ETF (TLH - Free Report) tracks ICE U.S Treasury 10-20 Year Bond Index and the iShares 20 Year Treasury Bond ETF (TLT - Free Report) tracks ICE U.S. Treasury 20+ Year Bond Index. IShares 1020 Year Treasury Bond ETF has $6.20 billion in assets, iShares 20 Year Treasury Bond ETF has $29.85 billion. TLH has an expense ratio of 0.15% and TLT charges 0.15%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Government Bond 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.