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Is Invesco Defensive Equity ETF (DEF) a Strong ETF Right Now?
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Designed to provide broad exposure to the Style Box - Large Cap Growth category of the market, the Invesco Defensive Equity ETF is a smart beta exchange traded fund launched on 12/15/2006.
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.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
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 managed by Invesco. DEF has been able to amass assets over $287.79 million, making it one of the average sized ETFs in the Style Box - Large Cap Growth. Before fees and expenses, DEF seeks to match the performance of the Guggenheim Defensive Equity Index.
The Invesco Defensive Equity Index is designed to provide exposure to securities of large-cap US issuers.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.55% for DEF, making it on par with most peer products in the space.
DEF's 12-month trailing dividend yield is 1.12%.
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.
Representing 22.50% of the portfolio, the fund has heaviest allocation to the Healthcare sector; Industrials and Consumer Staples round out the top three.
Taking into account individual holdings, Lockheed Martin Corp (LMT - Free Report) accounts for about 1.37% of the fund's total assets, followed by Archer-Daniels-Midland Co (ADM - Free Report) and Northrop Grumman Corp (NOC - Free Report) .
The top 10 holdings account for about 12.64% of total assets under management.
Performance and Risk
So far this year, DEF has lost about -4.51%, and is up roughly 9.48% in the last one year (as of 04/28/2022). During this past 52-week period, the fund has traded between $63.42 and $73.11.
The fund has a beta of 0.89 and standard deviation of 21.53% for the trailing three-year period, which makes DEF a medium risk choice in this particular space. With about 103 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco Defensive Equity ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Growth ETF (VUG - Free Report) tracks CRSP U.S. Large Cap Growth Index and the Invesco QQQ (QQQ - Free Report) tracks NASDAQ-100 Index. Vanguard Growth ETF has $73.42 billion in assets, Invesco QQQ has $169.83 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Growth.
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 Defensive Equity ETF (DEF) a Strong ETF Right Now?
Designed to provide broad exposure to the Style Box - Large Cap Growth category of the market, the Invesco Defensive Equity ETF is a smart beta exchange traded fund launched on 12/15/2006.
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.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
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 managed by Invesco. DEF has been able to amass assets over $287.79 million, making it one of the average sized ETFs in the Style Box - Large Cap Growth. Before fees and expenses, DEF seeks to match the performance of the Guggenheim Defensive Equity Index.
The Invesco Defensive Equity Index is designed to provide exposure to securities of large-cap US issuers.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.55% for DEF, making it on par with most peer products in the space.
DEF's 12-month trailing dividend yield is 1.12%.
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.
Representing 22.50% of the portfolio, the fund has heaviest allocation to the Healthcare sector; Industrials and Consumer Staples round out the top three.
Taking into account individual holdings, Lockheed Martin Corp (LMT - Free Report) accounts for about 1.37% of the fund's total assets, followed by Archer-Daniels-Midland Co (ADM - Free Report) and Northrop Grumman Corp (NOC - Free Report) .
The top 10 holdings account for about 12.64% of total assets under management.
Performance and Risk
So far this year, DEF has lost about -4.51%, and is up roughly 9.48% in the last one year (as of 04/28/2022). During this past 52-week period, the fund has traded between $63.42 and $73.11.
The fund has a beta of 0.89 and standard deviation of 21.53% for the trailing three-year period, which makes DEF a medium risk choice in this particular space. With about 103 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco Defensive Equity ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Growth segment of the market. However, there are other ETFs in the space which investors could consider.
Vanguard Growth ETF (VUG - Free Report) tracks CRSP U.S. Large Cap Growth Index and the Invesco QQQ (QQQ - Free Report) tracks NASDAQ-100 Index. Vanguard Growth ETF has $73.42 billion in assets, Invesco QQQ has $169.83 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Style Box - Large Cap Growth.
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.