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Is Invesco Dynamic Food & Beverage ETF (PBJ) a Strong ETF Right Now?

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The Invesco Dynamic Food & Beverage ETF (PBJ - Free Report) was launched on 06/23/2005, and is a smart beta exchange traded fund designed to offer broad exposure to the Consumer Staples 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.

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.

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 managed by Invesco, and has been able to amass over $356.94 million, which makes it one of the average sized ETFs in the Consumer Staples ETFs. This particular fund, before fees and expenses, seeks to match the performance of the Dynamic Food & Beverage Intellidex Index.

The Dynamic Food & Beverage Intellidex Index is comprised of stocks of 30 U.S. food and beverage companies.These are companies that are principally engaged in the manufacture, sale or distribution of food and beverage products, agricultural products and products related to the development of new food technologies.

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 0.63%.

The fund has a 12-month trailing dividend yield of 1.83%.

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.

This ETF has heaviest allocation in the Consumer Staples sector - about 96.90% of the portfolio.

Taking into account individual holdings, Keurig Dr Pepper Inc (KDP - Free Report) accounts for about 5.42% of the fund's total assets, followed by General Mills Inc (GIS - Free Report) and Sysco Corp (SYY - Free Report) .

Its top 10 holdings account for approximately 47.34% of PBJ's total assets under management.

Performance and Risk

The ETF has lost about -0.90% and was up about 1.79% so far this year and in the past one year (as of 01/04/2023), respectively. PBJ has traded between $42.01 and $49.16 during this last 52-week period.

The ETF has a beta of 0.64 and standard deviation of 20.19% for the trailing three-year period, making it a medium risk choice in the space. With about 30 holdings, it has more concentrated exposure than peers.

Alternatives

Invesco Dynamic Food & Beverage ETF is an excellent option for investors seeking to outperform the Consumer Staples ETFs segment of the market. There are other ETFs in the space which investors could consider as well.

VanEck Future of Food ETF tracks ---------------------------------------- and the First Trust NASDAQ Food & Beverage ETF (FTXG - Free Report) tracks Nasdaq US Smart Food & Beverage Index. VanEck Future of Food ETF has $2.71 million in assets, First Trust NASDAQ Food & Beverage ETF has $932.96 million. YUMY has an expense ratio of 0.69% and FTXG charges 0.60%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Consumer Staples 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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