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Is PowerShares S&P 500 BuyWrite Portfolio (PBP) a Hot ETF Right Now?
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The PowerShares S&P 500 BuyWrite Portfolio (PBP - Free Report) was launched on 12/20/2007, and is a smart beta exchange traded fund designed to offer broad exposure to the Large Cap ETFs category of the U.S. equity 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.
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.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
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
Managed by Invesco Powershares, PBP has amassed assets over $301.47 M, making it the largest ETF in the Large Cap ETFs. PBP seeks to match the performance of the CBOE S&P 500 BuyWrite Index before fees and expenses.
This index measures total returns of a theoretical portfolio including the S&P 500 Index stocks on which S&P 500 Index call options are systematically written against the portfolio through a buy-write strategy. A buy-write, also called a covered call, generally is considered to be an investment strategy in which an investor buys a stock or basket of stocks, and also sells call options.
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.
Operating expenses on an annual basis are 0.75% for PBP, making it one of the least expensive products in the space.
It's 12-month trailing dividend yield comes in at 5.12%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
When you look at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 3.66% of the fund's total assets, followed by Microsoft Corp (MSFT - Free Report) and Amazon.com Inc (AMZN - Free Report) .
Its top 10 holdings account for approximately 20.68% of PBP's total assets under management.
Performance and Risk
The fund's year-to-date return has lost about -0.89%, and is up about 6.11% in the last one year (as of 05/03/2018). PBP has traded between $20.01 and $22.99 in the past 52-week period.
PBP has a beta of 0.48 and standard deviation of 10.15% for the trailing three-year period. With about 506 holdings, it effectively diversifies company-specific risk.
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 PowerShares S&P 500 BuyWrite Portfolio (PBP) a Hot ETF Right Now?
The PowerShares S&P 500 BuyWrite Portfolio (PBP - Free Report) was launched on 12/20/2007, and is a smart beta exchange traded fund designed to offer broad exposure to the Large Cap ETFs category of the U.S. equity 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.
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.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
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
Managed by Invesco Powershares, PBP has amassed assets over $301.47 M, making it the largest ETF in the Large Cap ETFs. PBP seeks to match the performance of the CBOE S&P 500 BuyWrite Index before fees and expenses.
This index measures total returns of a theoretical portfolio including the S&P 500 Index stocks on which S&P 500 Index call options are systematically written against the portfolio through a buy-write strategy. A buy-write, also called a covered call, generally is considered to be an investment strategy in which an investor buys a stock or basket of stocks, and also sells call options.
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.
Operating expenses on an annual basis are 0.75% for PBP, making it one of the least expensive products in the space.
It's 12-month trailing dividend yield comes in at 5.12%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
When you look at individual holdings, Apple Inc (AAPL - Free Report) accounts for about 3.66% of the fund's total assets, followed by Microsoft Corp (MSFT - Free Report) and Amazon.com Inc (AMZN - Free Report) .
Its top 10 holdings account for approximately 20.68% of PBP's total assets under management.
Performance and Risk
The fund's year-to-date return has lost about -0.89%, and is up about 6.11% in the last one year (as of 05/03/2018). PBP has traded between $20.01 and $22.99 in the past 52-week period.
PBP has a beta of 0.48 and standard deviation of 10.15% for the trailing three-year period. With about 506 holdings, it effectively diversifies company-specific risk.
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.