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Is Invesco Leisure & Entertainmen (PEJ) a Strong ETF Right Now?
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Designed to provide broad exposure to the Consumer Discretionary ETFs category of the market, the Invesco Leisure & Entertainmen (PEJ - 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 offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
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 managed by Invesco. PEJ has been able to amass assets over $374.22 million, making it one of the larger ETFs in the Consumer Discretionary ETFs. This particular fund, before fees and expenses, seeks to match the performance of the Dynamic Leisure & Entertainment Intellidex Index.
The Dynamic Leisure & Entertainment Intellidex Index is comprised of stocks of U.S. leisure and entertainment companies. The Index is designed to provide capital appreciation by thoroughly evaluating companies based on a variety of investment merit criteria, including fundamental growth, stock valuation, investment timeliness and risk factors.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for this ETF are 0.55%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 0.52%.
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.
For PEJ, it has heaviest allocation in the Consumer Discretionary sector --about 52.40% of the portfolio --while Telecom and Industrials round out the top three.
When you look at individual holdings, Marriott International Inc/md (MAR - Free Report) accounts for about 5.85% of the fund's total assets, followed by Booking Holdings Inc (BKNG - Free Report) and Fox Corp (FOXA - Free Report) .
The top 10 holdings account for about 47.31% of total assets under management.
Performance and Risk
The ETF return is roughly 12.32% and it's up approximately 4.29% so far this year and in the past one year (as of 08/31/2023), respectively. PEJ has traded between $34.60 and $43.23 during this last 52-week period.
The fund has a beta of 1.31 and standard deviation of 25.40% for the trailing three-year period, which makes PEJ a high risk choice in this particular space. With about 32 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco Leisure & Entertainmen is a reasonable option for investors seeking to outperform the Consumer Discretionary ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Global X Video Games & Esports ETF (HERO - Free Report) tracks SOLACTIVE VIDEO GAMES & ESPORTS INDEX and the VanEck Video Gaming and eSports ETF (ESPO - Free Report) tracks MVIS GLOBAL VIDEO GAMING AND ESPORTS IND. Global X Video Games & Esports ETF has $166.16 million in assets, VanEck Video Gaming and eSports ETF has $268.09 million. HERO has an expense ratio of 0.50% and ESPO charges 0.56%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Consumer Discretionary 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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Is Invesco Leisure & Entertainmen (PEJ) a Strong ETF Right Now?
Designed to provide broad exposure to the Consumer Discretionary ETFs category of the market, the Invesco Leisure & Entertainmen (PEJ - 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 offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
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 managed by Invesco. PEJ has been able to amass assets over $374.22 million, making it one of the larger ETFs in the Consumer Discretionary ETFs. This particular fund, before fees and expenses, seeks to match the performance of the Dynamic Leisure & Entertainment Intellidex Index.
The Dynamic Leisure & Entertainment Intellidex Index is comprised of stocks of U.S. leisure and entertainment companies. The Index is designed to provide capital appreciation by thoroughly evaluating companies based on a variety of investment merit criteria, including fundamental growth, stock valuation, investment timeliness and risk factors.
Cost & Other Expenses
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for this ETF are 0.55%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 0.52%.
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.
For PEJ, it has heaviest allocation in the Consumer Discretionary sector --about 52.40% of the portfolio --while Telecom and Industrials round out the top three.
When you look at individual holdings, Marriott International Inc/md (MAR - Free Report) accounts for about 5.85% of the fund's total assets, followed by Booking Holdings Inc (BKNG - Free Report) and Fox Corp (FOXA - Free Report) .
The top 10 holdings account for about 47.31% of total assets under management.
Performance and Risk
The ETF return is roughly 12.32% and it's up approximately 4.29% so far this year and in the past one year (as of 08/31/2023), respectively. PEJ has traded between $34.60 and $43.23 during this last 52-week period.
The fund has a beta of 1.31 and standard deviation of 25.40% for the trailing three-year period, which makes PEJ a high risk choice in this particular space. With about 32 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco Leisure & Entertainmen is a reasonable option for investors seeking to outperform the Consumer Discretionary ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Global X Video Games & Esports ETF (HERO - Free Report) tracks SOLACTIVE VIDEO GAMES & ESPORTS INDEX and the VanEck Video Gaming and eSports ETF (ESPO - Free Report) tracks MVIS GLOBAL VIDEO GAMING AND ESPORTS IND. Global X Video Games & Esports ETF has $166.16 million in assets, VanEck Video Gaming and eSports ETF has $268.09 million. HERO has an expense ratio of 0.50% and ESPO charges 0.56%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Consumer Discretionary 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.