Designed to provide broad exposure to the Utilities - Broad segment of the equity market, the Invesco DWA Utilities Momentum ETF (PUI) is a passively managed exchange traded fund launched on 10/26/2005.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Utilities - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 10, placing it in bottom 38%.
The fund is sponsored by Invesco. It has amassed assets over $230.27 M, making it one of the average sized ETFs attempting to match the performance of the Utilities - Broad segment of the equity market. PUI seeks to match the performance of the DWA Utilities Technical Leaders Index before fees and expenses.
The DWA Utilities Technical Leaders Index identifies companies that are showing relative strength and are composed of at least 30 common stocks from a universe of approximately 3,000 common stocks traded on US exchanges.
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 counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.60%, making it one of the more expensive products in the space.
It has a 12-month trailing dividend yield of 1.62%.
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 Utilities sector--about 96.70% of the portfolio.
Looking at individual holdings, American Water Works Co Inc (AWK) accounts for about 3.86% of total assets, followed by Evergy Inc (EVRG) and Nextera Energy Inc (
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The top 10 holdings account for about 36.08% of total assets under management.
Performance and Risk
So far this year, PUI has gained about 17.69%, and was up about 13.16% in the last one year (as of 11/21/2019). During this past 52-week period, the fund has traded between $28.07 and $35.16.
The ETF has a beta of 0.22 and standard deviation of 13.14% for the trailing three-year period, making it a medium risk choice in the space. With about 36 holdings, it has more concentrated exposure than peers.
Invesco DWA Utilities Momentum ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, PUI is a sufficient option for those seeking exposure to the Utilities/Infrastructure ETFs area of the market. Investors might also want to consider some other ETF options in the space.
Vanguard Utilities ETF (VPU) tracks MSCI US Investable Market Utilities 25/50 Index and the Utilities Select Sector SPDR Fund (XLU) tracks Utilities Select Sector Index. Vanguard Utilities ETF has $4.32 B in assets, Utilities Select Sector SPDR Fund has $11.05 B. VPU has an expense ratio of 0.10% and XLU charges 0.13%.
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