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Is Invesco Leisure and Entertainment ETF (PEJ) a Strong ETF Right Now?
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Making its debut on 06/23/2005, smart beta exchange traded fund Invesco Leisure and Entertainment ETF (PEJ - Free Report) provides investors broad exposure to the Consumer Discretionary ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
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.
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 $301.78 million, which makes it one of the larger ETFs in the Consumer Discretionary ETFs. This particular fund seeks to match the performance of the Dynamic Leisure & Entertainment Intellidex Index before fees and expenses.
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
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 0.58% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 0.48%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
PEJ's heaviest allocation is in the Consumer Discretionary sector, which is about 45.70% of the portfolio. Its Telecom and Industrials round out the top three.
Looking at individual holdings, Royal Caribbean Cruises Ltd (RCL - Free Report) accounts for about 5.43% of total assets, followed by Warner Bros Discovery Inc (WBD - Free Report) and Airbnb Inc (ABNB - Free Report) .
PEJ's top 10 holdings account for about 46.6% of its total assets under management.
Performance and Risk
The ETF has lost about -4.29% so far this year and was up about 0.18% in the last one year (as of 01/17/2024). In the past 52-week period, it has traded between $34.95 and $43.23.
The fund has a beta of 1.34 and standard deviation of 24.85% 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 and Entertainment ETF is not a suitable option for investors seeking to outperform the Consumer Discretionary ETFs segment of the market. Instead, there are other ETFs in the space which investors should 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 $125.06 million in assets, VanEck Video Gaming and eSports ETF has $244.41 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 and Entertainment ETF (PEJ) a Strong ETF Right Now?
Making its debut on 06/23/2005, smart beta exchange traded fund Invesco Leisure and Entertainment ETF (PEJ - Free Report) provides investors broad exposure to the Consumer Discretionary ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
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.
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 $301.78 million, which makes it one of the larger ETFs in the Consumer Discretionary ETFs. This particular fund seeks to match the performance of the Dynamic Leisure & Entertainment Intellidex Index before fees and expenses.
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
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 0.58% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 0.48%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
PEJ's heaviest allocation is in the Consumer Discretionary sector, which is about 45.70% of the portfolio. Its Telecom and Industrials round out the top three.
Looking at individual holdings, Royal Caribbean Cruises Ltd (RCL - Free Report) accounts for about 5.43% of total assets, followed by Warner Bros Discovery Inc (WBD - Free Report) and Airbnb Inc (ABNB - Free Report) .
PEJ's top 10 holdings account for about 46.6% of its total assets under management.
Performance and Risk
The ETF has lost about -4.29% so far this year and was up about 0.18% in the last one year (as of 01/17/2024). In the past 52-week period, it has traded between $34.95 and $43.23.
The fund has a beta of 1.34 and standard deviation of 24.85% 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 and Entertainment ETF is not a suitable option for investors seeking to outperform the Consumer Discretionary ETFs segment of the market. Instead, there are other ETFs in the space which investors should 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 $125.06 million in assets, VanEck Video Gaming and eSports ETF has $244.41 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.