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Is Invesco 130 Laddered Treasury ETF (PLW) a Strong ETF Right Now?

Smart Beta ETF report for PLW

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This story originally appeared on Zacks

Making its debut on 10/11/2007, smart beta exchange traded fund Invesco 130 Laddered Treasury ETF (PLW) provides investors broad exposure to the Government Bond ETFs category of the market.

- Zacks

What Are Smart Beta ETFs?

Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.

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.

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.

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. PLW has been able to amass assets over $406.67 million, making it one of the average sized ETFs in the Government Bond ETFs. PLW seeks to match the performance of the Ryan/NASDAQ U.S. 1-30 Year Treasury Laddered Index before fees and expenses.

The Ryan/NASDAQ U.S. 1-30 Year Treasury Laddered Index measures the potential returns of the U.S. Treasury yield curve based on approximately 30 equally weighted U.S. Treasury issues with fixed coupons, scheduled to mature in a proportional, annual sequential structure.

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.

Operating expenses on an annual basis are 0.25% for this ETF, which makes it one of the most expensive products in the space.

It has a 12-month trailing dividend yield of 1.05%.

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.

Looking at individual holdings, United States Treasury Note/bond-4.50%-02-15-2036 (912810FT0) accounts for about 10% of total assets, followed by United States Treasury Note/bond-5.38%-02-15-2031 (912810FP8) and United States Treasury Note/bond-1.88%-02-15-2051 (912810SU3).

Its top 10 holdings account for approximately 46.94% of PLW's total assets under management.

Performance and Risk

So far this year, PLW has lost about -4.63%, and is down about -5.73% in the last one year (as of 10/07/2021). During this past 52-week period, the fund has traded between $34.96 and $39.13.

PLW has a beta of -0.16 and standard deviation of 9.35% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 28 holdings, it has more concentrated exposure than peers.

Alternatives

Invesco 130 Laddered Treasury ETF is not a suitable option for investors seeking to outperform the Government Bond ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.

SPDR Portfolio Long Term Treasury ETF (SPTL) tracks Bloomberg Barclays Long U.S. Treasury Index and the iShares 20 Year Treasury Bond ETF (TLT) tracks ICE U.S. Treasury 20+ Year Bond Index. SPDR Portfolio Long Term Treasury ETF has $4.18 billion in assets, iShares 20 Year Treasury Bond ETF has $15.31 billion. SPTL has an expense ratio of 0.06% and TLT charges 0.15%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Government Bond 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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Invesco 130 Laddered Treasury ETF (PLW): ETF Research Reports

 

iShares 20 Year Treasury Bond ETF (TLT): ETF Research Reports

 

SPDR Portfolio Long Term Treasury ETF (SPTL): ETF Research Reports

 

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Zacks Investment Research