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Is Invesco High Yield Equity Dividend Achievers ETF (PEY) a Strong ETF Right Now?
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Launched on 12/09/2004, the Invesco High Yield Equity Dividend Achievers ETF (PEY - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - All Cap Value category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader 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.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix 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, and has been able to amass over $1.36 billion, which makes it one of the largest ETFs in the Style Box - All Cap Value. PEY, before fees and expenses, seeks to match the performance of the NASDAQ US Dividend Achievers 50 Index.
The NASDAQ US Dividend Achievers 50 Index is comprised of 50 stocks selected principally on the basis of dividend yield and consistent growth in dividends.
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.
Annual operating expenses for PEY are 0.52%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 4.56%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
For PEY, it has heaviest allocation in the Utilities sector --about 25.70% of the portfolio --while Financials and Consumer Staples round out the top three.
Looking at individual holdings, Altria Group Inc (MO - Free Report) accounts for about 3.49% of total assets, followed by Vf Corp (VFC - Free Report) and Verizon Communications Inc (VZ - Free Report) .
Its top 10 holdings account for approximately 27.52% of PEY's total assets under management.
Performance and Risk
So far this year, PEY has lost about -7.21%, and is down about -6.50% in the last one year (as of 05/15/2023). During this past 52-week period, the fund has traded between $18.59 and $22.23.
The fund has a beta of 0.87 and standard deviation of 19.93% for the trailing three-year period, which makes PEY a medium risk choice in this particular space. With about 51 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco High Yield Equity Dividend Achievers ETF is an excellent option for investors seeking to outperform the Style Box - All Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
Dimensional U.S. Targeted Value ETF (DFAT - Free Report) tracks ---------------------------------------- and the iShares Core S&P U.S. Value ETF (IUSV - Free Report) tracks S&P 900 Value Index. Dimensional U.S. Targeted Value ETF has $7.26 billion in assets, iShares Core S&P U.S. Value ETF has $13.07 billion. DFAT has an expense ratio of 0.28% and IUSV charges 0.04%.
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 - All Cap Value.
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 High Yield Equity Dividend Achievers ETF (PEY) a Strong ETF Right Now?
Launched on 12/09/2004, the Invesco High Yield Equity Dividend Achievers ETF (PEY - Free Report) is a smart beta exchange traded fund offering broad exposure to the Style Box - All Cap Value category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader 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.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix 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, and has been able to amass over $1.36 billion, which makes it one of the largest ETFs in the Style Box - All Cap Value. PEY, before fees and expenses, seeks to match the performance of the NASDAQ US Dividend Achievers 50 Index.
The NASDAQ US Dividend Achievers 50 Index is comprised of 50 stocks selected principally on the basis of dividend yield and consistent growth in dividends.
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.
Annual operating expenses for PEY are 0.52%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 4.56%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
For PEY, it has heaviest allocation in the Utilities sector --about 25.70% of the portfolio --while Financials and Consumer Staples round out the top three.
Looking at individual holdings, Altria Group Inc (MO - Free Report) accounts for about 3.49% of total assets, followed by Vf Corp (VFC - Free Report) and Verizon Communications Inc (VZ - Free Report) .
Its top 10 holdings account for approximately 27.52% of PEY's total assets under management.
Performance and Risk
So far this year, PEY has lost about -7.21%, and is down about -6.50% in the last one year (as of 05/15/2023). During this past 52-week period, the fund has traded between $18.59 and $22.23.
The fund has a beta of 0.87 and standard deviation of 19.93% for the trailing three-year period, which makes PEY a medium risk choice in this particular space. With about 51 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco High Yield Equity Dividend Achievers ETF is an excellent option for investors seeking to outperform the Style Box - All Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
Dimensional U.S. Targeted Value ETF (DFAT - Free Report) tracks ---------------------------------------- and the iShares Core S&P U.S. Value ETF (IUSV - Free Report) tracks S&P 900 Value Index. Dimensional U.S. Targeted Value ETF has $7.26 billion in assets, iShares Core S&P U.S. Value ETF has $13.07 billion. DFAT has an expense ratio of 0.28% and IUSV charges 0.04%.
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 - All Cap Value.
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.