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Is Invesco 130 Laddered Treasury ETF (PLW) a Strong ETF Right Now?
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Launched on 10/11/2007, the Invesco 130 Laddered Treasury ETF is a smart beta exchange traded fund offering broad exposure to the Government Bond ETFs category of the 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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
PLW is managed by Invesco, and this fund has amassed over $531.13 million, which makes it one of the average sized ETFs in the Government Bond ETFs. This particular fund 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's 12-month trailing dividend yield comes in at 1.57%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
When you look at individual holdings, United States Treasury Note/bond-4.50%-2-15-2036 accounts for about 9.48% of the fund's total assets, followed by United States Treasury Note/bond-5.38%-2-15-2031 and United States Treasury Note/bond-2.75%-2-15-2024.
Its top 10 holdings account for approximately 45.48% of PLW's total assets under management.
Performance and Risk
Year-to-date, the Invesco 130 Laddered Treasury ETF has lost about -11.74% so far, and is down about -13.54% over the last 12 months (as of 08/16/2022). PLW has traded between $30.03 and $37.38 in this past 52-week period.
The fund has a beta of -0.05 and standard deviation of 10.58% for the trailing three-year period, which makes PLW a high risk choice in this particular space. With about 29 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 - Free Report) tracks Bloomberg Barclays Long U.S. Treasury Index and the iShares 20 Year Treasury Bond ETF (TLT - Free Report) tracks ICE U.S. Treasury 20+ Year Bond Index. SPDR Portfolio Long Term Treasury ETF has $6.43 billion in assets, iShares 20 Year Treasury Bond ETF has $25.20 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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Is Invesco 130 Laddered Treasury ETF (PLW) a Strong ETF Right Now?
Launched on 10/11/2007, the Invesco 130 Laddered Treasury ETF is a smart beta exchange traded fund offering broad exposure to the Government Bond ETFs category of the 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.
On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.
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.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
PLW is managed by Invesco, and this fund has amassed over $531.13 million, which makes it one of the average sized ETFs in the Government Bond ETFs. This particular fund 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's 12-month trailing dividend yield comes in at 1.57%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
When you look at individual holdings, United States Treasury Note/bond-4.50%-2-15-2036 accounts for about 9.48% of the fund's total assets, followed by United States Treasury Note/bond-5.38%-2-15-2031 and United States Treasury Note/bond-2.75%-2-15-2024.
Its top 10 holdings account for approximately 45.48% of PLW's total assets under management.
Performance and Risk
Year-to-date, the Invesco 130 Laddered Treasury ETF has lost about -11.74% so far, and is down about -13.54% over the last 12 months (as of 08/16/2022). PLW has traded between $30.03 and $37.38 in this past 52-week period.
The fund has a beta of -0.05 and standard deviation of 10.58% for the trailing three-year period, which makes PLW a high risk choice in this particular space. With about 29 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 - Free Report) tracks Bloomberg Barclays Long U.S. Treasury Index and the iShares 20 Year Treasury Bond ETF (TLT - Free Report) tracks ICE U.S. Treasury 20+ Year Bond Index. SPDR Portfolio Long Term Treasury ETF has $6.43 billion in assets, iShares 20 Year Treasury Bond ETF has $25.20 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.