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

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Designed to provide broad exposure to the Consumer Staples ETFs category of the market, the Invesco Dynamic Food & Beverage ETF (PBJ - Free Report) is a smart beta exchange traded fund launched on 06/23/2005.

What Are Smart Beta ETFs?

The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.

Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.

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.

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.

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. PBJ has been able to amass assets over $322.82 million, making 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

Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.

With on par with most peer products in the space, this ETF has annual operating expenses of 0.63%.

It's 12-month trailing dividend yield comes in at 1.84%.

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 93.60% of the portfolio.

Looking at individual holdings, General Mills Inc (GIS - Free Report) accounts for about 5.49% of total assets, followed by Kraft Heinz Co/the (KHC - Free Report) and Hershey Co/the (HSY - Free Report) .

Its top 10 holdings account for approximately 46.87% of PBJ's total assets under management.

Performance and Risk

The ETF has lost about -1.10% and is up about 1.32% so far this year and in the past one year (as of 03/08/2023), respectively. PBJ has traded between $42.01 and $49.16 during this last 52-week period.

The fund has a beta of 0.62 and standard deviation of 19.91% for the trailing three-year period, which makes PBJ a medium risk choice in this particular space. With about 31 holdings, it has more concentrated exposure than peers.

Alternatives

Invesco Dynamic Food & Beverage ETF is a reasonable option for investors seeking to outperform the Consumer Staples ETFs segment of the market. However, there are other ETFs in the space which investors could consider.

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 $2.73 million in assets, First Trust NASDAQ Food & Beverage ETF has $1.03 billion. 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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