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Is Invesco Dynamic Energy Exploration & Production ETF (PXE) a Strong ETF Right Now?

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Making its debut on 10/26/2005, smart beta exchange traded fund Invesco Dynamic Energy Exploration & Production ETF (PXE - Free Report) provides investors broad exposure to the Energy 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.

A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.

If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking 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 sponsored by Invesco. It has amassed assets over $308.94 million, making it one of the average sized ETFs in the Energy ETFs. PXE, before fees and expenses, seeks to match the performance of the Dynamic Energy Exploration & Production Intellidex Index.

The Dynamic Energy Exploration & Production Intellidex Index is composed of stocks of 30 U.S. companies involved in the exploration and production of natural resources used to produce energy.

Cost & Other Expenses

Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.

Operating expenses on an annual basis are 0.63% for this ETF, which makes it on par with most peer products in the space.

PXE's 12-month trailing dividend yield is 2.97%.

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 Energy sector - about 97% of the portfolio.

When you look at individual holdings, Phillips 66 (PSX - Free Report) accounts for about 5.35% of the fund's total assets, followed by Marathon Petroleum Corp (MPC - Free Report) and Eog Resources Inc (EOG - Free Report) .

The top 10 holdings account for about 47.27% of total assets under management.

Performance and Risk

So far this year, PXE has added roughly 1.99%, and it's up approximately 35.02% in the last one year (as of 01/17/2023). During this past 52-week period, the fund has traded between $21.15 and $36.33.

The fund has a beta of 1.83 and standard deviation of 52.41% for the trailing three-year period, which makes PXE a high risk choice in this particular space. With about 31 holdings, it has more concentrated exposure than peers.


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

IShares U.S. Oil & Gas Exploration & Production ETF (IEO - Free Report) tracks Dow Jones U.S. Select Oil Exploration & Production Index and the SPDR S&P Oil & Gas Exploration & Production ETF (XOP - Free Report) tracks S&P Oil & Gas Exploration & Production Select Industry Index. IShares U.S. Oil & Gas Exploration & Production ETF has $1.09 billion in assets, SPDR S&P Oil & Gas Exploration & Production ETF has $4.28 billion. IEO has an expense ratio of 0.39% and XOP charges 0.35%.

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