Is Invesco Dynamic Leisure and Entertainment ETF (PEJ) a Strong ETF Right Now?
Smart Beta ETF report for PEJ
Making its debut on 06/23/2005, smart beta exchange traded fund Invesco Dynamic Leisure and Entertainment ETF (PEJ) provides investors broad exposure to the Consumer Discretionary ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
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 sponsored by Invesco. It has amassed assets over $1.45 billion, making it one of the larger ETFs in the Consumer Discretionary ETFs. Before fees and expenses, this particular fund seeks to match the performance of the Dynamic Leisure & Entertainment Intellidex Index.
The 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
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.63%, making it on par with most peer products in the space.
PEJ's 12-month trailing dividend yield is 0.73%.
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.
This ETF has heaviest allocation in the Consumer Discretionary sector - about 55.20% of the portfolio. Telecom and Consumer Staples round out the top three.
Taking into account individual holdings, Viacomcbs Inc (VIAC) accounts for about 5.26% of the fund's total assets, followed by Starbucks Corp (SBUX) and Yum China Holdings Inc (YUMC).
Its top 10 holdings account for approximately 46.64% of PEJ's total assets under management.
Performance and Risk
So far this year, PEJ has gained about 31.71%, and was up about 71.28% in the last one year (as of 10/29/2021). During this past 52-week period, the fund has traded between $30 and $54.78.
PEJ has a beta of 1.37 and standard deviation of 32.72% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 32 holdings, it has more concentrated exposure than peers.
Invesco Dynamic Leisure and Entertainment ETF is a reasonable option for investors seeking to outperform the Consumer Discretionary ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
Global X Video Games & Esports ETF (HERO) tracks SOLACTIVE VIDEO GAMES & ESPORTS INDEX and the VanEck Video Gaming and eSports ETF (ESPO) tracks MVIS GLOBAL VIDEO GAMING AND ESPORTS IND. Global X Video Games & Esports ETF has $502.19 million in assets, VanEck Video Gaming and eSports ETF has $641.95 million. HERO has an expense ratio of 0.50% and ESPO charges 0.55%.
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.
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.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Invesco Dynamic Leisure and Entertainment ETF (PEJ): ETF Research Reports
Starbucks Corporation (SBUX): Free Stock Analysis Report
Global X Video Games & Esports ETF (HERO): ETF Research Reports
Yum China (YUMC): Free Stock Analysis Report
VanEck Video Gaming and eSports ETF (ESPO): ETF Research Reports
ViacomCBS Inc. (VIAC): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research