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Is Invesco Water Resources ETF (PHO) a Strong ETF Right Now?
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Launched on 12/06/2005, the Invesco Water Resources ETF (PHO - Free Report) is a smart beta exchange traded fund offering broad exposure to the Industrials ETFs category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well 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.
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
Managed by Invesco, PHO has amassed assets over $2.19 billion, making it one of the larger ETFs in the Industrials ETFs. Before fees and expenses, PHO seeks to match the performance of the NASDAQ OMX US Water Index.
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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.59%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 0.44%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Industrials sector - about 65.60% of the portfolio. Information Technology and Utilities round out the top three.
Looking at individual holdings, Ecolab Inc (ECL - Free Report) accounts for about 8.24% of total assets, followed by Roper Technologies Inc (ROP - Free Report) and Ferguson Enterprises Inc (FERG - Free Report) .
The top 10 holdings account for about 57.48% of total assets under management.
Performance and Risk
The ETF has gained about 3.04% and is up about 14.38% so far this year and in the past one year (as of 01/21/2025), respectively. PHO has traded between $58.81 and $72.14 during this last 52-week period.
PHO has a beta of 1 and standard deviation of 19.14% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 39 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco Water Resources ETF is an excellent option for investors seeking to outperform the Industrials ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
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 $892.44 million in assets, First Trust Water ETF has $1.81 billion. CGW has an expense ratio of 0.56% 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?
Launched on 12/06/2005, the Invesco Water Resources ETF (PHO - Free Report) is a smart beta exchange traded fund offering broad exposure to the Industrials ETFs category of the market.
What Are Smart Beta ETFs?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well 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.
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
Managed by Invesco, PHO has amassed assets over $2.19 billion, making it one of the larger ETFs in the Industrials ETFs. Before fees and expenses, PHO seeks to match the performance of the NASDAQ OMX US Water Index.
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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.59%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 0.44%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Industrials sector - about 65.60% of the portfolio. Information Technology and Utilities round out the top three.
Looking at individual holdings, Ecolab Inc (ECL - Free Report) accounts for about 8.24% of total assets, followed by Roper Technologies Inc (ROP - Free Report) and Ferguson Enterprises Inc (FERG - Free Report) .
The top 10 holdings account for about 57.48% of total assets under management.
Performance and Risk
The ETF has gained about 3.04% and is up about 14.38% so far this year and in the past one year (as of 01/21/2025), respectively. PHO has traded between $58.81 and $72.14 during this last 52-week period.
PHO has a beta of 1 and standard deviation of 19.14% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 39 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco Water Resources ETF is an excellent option for investors seeking to outperform the Industrials ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
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 $892.44 million in assets, First Trust Water ETF has $1.81 billion. CGW has an expense ratio of 0.56% 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.