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Is Invesco Water Resources ETF (PHO) a Strong ETF Right Now?
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A smart beta exchange traded fund, the Invesco Water Resources ETF (PHO - Free Report) debuted on 12/06/2005, and offers broad exposure to the Industrials ETFs 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.
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.
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.
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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is managed by Invesco. PHO has been able to amass assets over $1.88 billion, making it one of the larger ETFs in the Industrials ETFs. This particular fund seeks to match the performance of the NASDAQ OMX US Water Index before fees and expenses.
The NASDAQ OMX US Water Index tracks the performance of US exchange-listed companies that create products designed to conserve and purify water for homes, businesses and industries.
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 0.60%.
It has a 12-month trailing dividend yield of 0.62%.
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 Industrials sector - about 57.40% of the portfolio. Utilities and Information Technology round out the top three.
Taking into account individual holdings, Ferguson Plc (FERG - Free Report) accounts for about 8.83% of the fund's total assets, followed by Roper Technologies Inc (ROP - Free Report) and Ecolab Inc (ECL - Free Report) .
Its top 10 holdings account for approximately 59.8% of PHO's total assets under management.
Performance and Risk
The ETF has lost about -3.60% and is up roughly 14.73% so far this year and in the past one year (as of 01/08/2024), respectively. PHO has traded between $49.77 and $61.28 during this last 52-week period.
The ETF has a beta of 0.99 and standard deviation of 19.45% for the trailing three-year period, making it a medium risk choice in the space. With about 40 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco Water Resources ETF is a reasonable option for investors seeking to outperform the Industrials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Invesco S&P Global Water Index ETF (CGW - Free Report) tracks S&P GLOBAL WATER INDEX and the First Trust Water ETF (FIW - Free Report) tracks ISE Clean Edge Water Index. Invesco S&P Global Water Index ETF has $927.98 million in assets, First Trust Water ETF has $1.47 billion. CGW has an expense ratio of 0.57% and FIW charges 0.53%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Industrials 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 Water Resources ETF (PHO) a Strong ETF Right Now?
A smart beta exchange traded fund, the Invesco Water Resources ETF (PHO - Free Report) debuted on 12/06/2005, and offers broad exposure to the Industrials ETFs 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.
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.
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.
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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is managed by Invesco. PHO has been able to amass assets over $1.88 billion, making it one of the larger ETFs in the Industrials ETFs. This particular fund seeks to match the performance of the NASDAQ OMX US Water Index before fees and expenses.
The NASDAQ OMX US Water Index tracks the performance of US exchange-listed companies that create products designed to conserve and purify water for homes, businesses and industries.
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 0.60%.
It has a 12-month trailing dividend yield of 0.62%.
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 Industrials sector - about 57.40% of the portfolio. Utilities and Information Technology round out the top three.
Taking into account individual holdings, Ferguson Plc (FERG - Free Report) accounts for about 8.83% of the fund's total assets, followed by Roper Technologies Inc (ROP - Free Report) and Ecolab Inc (ECL - Free Report) .
Its top 10 holdings account for approximately 59.8% of PHO's total assets under management.
Performance and Risk
The ETF has lost about -3.60% and is up roughly 14.73% so far this year and in the past one year (as of 01/08/2024), respectively. PHO has traded between $49.77 and $61.28 during this last 52-week period.
The ETF has a beta of 0.99 and standard deviation of 19.45% for the trailing three-year period, making it a medium risk choice in the space. With about 40 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco Water Resources ETF is a reasonable option for investors seeking to outperform the Industrials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Invesco S&P Global Water Index ETF (CGW - Free Report) tracks S&P GLOBAL WATER INDEX and the First Trust Water ETF (FIW - Free Report) tracks ISE Clean Edge Water Index. Invesco S&P Global Water Index ETF has $927.98 million in assets, First Trust Water ETF has $1.47 billion. CGW has an expense ratio of 0.57% and FIW charges 0.53%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Industrials 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.