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Is Invesco Defensive Equity ETF (DEF) a Strong ETF Right Now?
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A smart beta exchange traded fund, the Invesco Defensive Equity ETF debuted on 12/15/2006, and offers broad exposure to the Style Box - Large Cap Growth category of the market.
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.
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.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is sponsored by Invesco. It has amassed assets over $228.16 million, making it one of the average sized ETFs in the Style Box - Large Cap Growth. This particular fund seeks to match the performance of the Guggenheim Defensive Equity Index before fees and expenses.
The Invesco Defensive Equity Index is designed to provide exposure to securities of large-cap US issuers.
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 0.54% for DEF, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.47%.
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.
DEF's heaviest allocation is in the Financials sector, which is about 19.70% of the portfolio. Its Healthcare and Industrials round out the top three.
Looking at individual holdings, Juniper Networks Inc (JNPR - Free Report) accounts for about 1.10% of total assets, followed by Cboe Global Markets Inc (CBOE - Free Report) and Kimberly-Clark Corp (KMB - Free Report) .
DEF's top 10 holdings account for about 10.79% of its total assets under management.
Performance and Risk
So far this year, DEF has added roughly 0.52%, and is up about 2.78% in the last one year (as of 05/10/2023). During this past 52-week period, the fund has traded between $60.13 and $70.48.
DEF has a beta of 0.85 and standard deviation of 15.41% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 102 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco Defensive Equity ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Growth segment of the market. There are other ETFs in the space which investors could consider as well.
Vanguard Growth ETF (VUG - Free Report) tracks CRSP U.S. Large Cap Growth Index and the Invesco QQQ (QQQ - Free Report) tracks NASDAQ-100 Index. Vanguard Growth ETF has $82.41 billion in assets, Invesco QQQ has $174.20 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Growth.
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 Defensive Equity ETF (DEF) a Strong ETF Right Now?
A smart beta exchange traded fund, the Invesco Defensive Equity ETF debuted on 12/15/2006, and offers broad exposure to the Style Box - Large Cap Growth category of the market.
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.
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.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
The fund is sponsored by Invesco. It has amassed assets over $228.16 million, making it one of the average sized ETFs in the Style Box - Large Cap Growth. This particular fund seeks to match the performance of the Guggenheim Defensive Equity Index before fees and expenses.
The Invesco Defensive Equity Index is designed to provide exposure to securities of large-cap US issuers.
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 0.54% for DEF, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 1.47%.
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.
DEF's heaviest allocation is in the Financials sector, which is about 19.70% of the portfolio. Its Healthcare and Industrials round out the top three.
Looking at individual holdings, Juniper Networks Inc (JNPR - Free Report) accounts for about 1.10% of total assets, followed by Cboe Global Markets Inc (CBOE - Free Report) and Kimberly-Clark Corp (KMB - Free Report) .
DEF's top 10 holdings account for about 10.79% of its total assets under management.
Performance and Risk
So far this year, DEF has added roughly 0.52%, and is up about 2.78% in the last one year (as of 05/10/2023). During this past 52-week period, the fund has traded between $60.13 and $70.48.
DEF has a beta of 0.85 and standard deviation of 15.41% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 102 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco Defensive Equity ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Growth segment of the market. There are other ETFs in the space which investors could consider as well.
Vanguard Growth ETF (VUG - Free Report) tracks CRSP U.S. Large Cap Growth Index and the Invesco QQQ (QQQ - Free Report) tracks NASDAQ-100 Index. Vanguard Growth ETF has $82.41 billion in assets, Invesco QQQ has $174.20 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Growth.
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.