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Should Invesco Dividend Achievers ETF (PFM) Be on Your Investing Radar?
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The Invesco Dividend Achievers ETF (PFM - Free Report) was launched on 09/15/2005, and is a passively managed exchange traded fund designed to offer broad exposure to the Large Cap Value segment of the US equity market.
The fund is sponsored by Invesco. It has amassed assets over $669.27 million, making it one of the average sized ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Companies that fall in the large cap category tend to have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.
Value stocks have lower than average price-to-earnings and price-to-book ratios. They also have lower than average sales and earnings growth rates. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. They are however likely to underperform growth stocks in strong bull markets.
Costs
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 0.52%, making it one of the more expensive products in the space.
It has a 12-month trailing dividend yield of 1.91%.
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.
This ETF has heaviest allocation to the Financials sector--about 17.30% of the portfolio. Information Technology and Healthcare round out the top three.
Looking at individual holdings, Microsoft Corp (MSFT - Free Report) accounts for about 3.95% of total assets, followed by Unitedhealth Group Inc (UNH - Free Report) and Johnson & Johnson (JNJ - Free Report) .
The top 10 holdings account for about 24.11% of total assets under management.
Performance and Risk
PFM seeks to match the performance of the NASDAQ US Broad Dividend Achievers Index before fees and expenses. The NASDAQ US Broad Dividend Achievers Index is designed to identify a diversified group of dividend-paying companies which have increased their annual dividend for 10 or more consecutive fiscal years.
The ETF has added roughly 2.08% so far this year and is down about -2.25% in the last one year (as of 04/24/2023). In the past 52-week period, it has traded between $32.34 and $38.02.
The ETF has a beta of 0.83 and standard deviation of 15.88% for the trailing three-year period, making it a medium risk choice in the space. With about 373 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco Dividend Achievers ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, PFM is an excellent option for investors seeking exposure to the Style Box - Large Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Russell 1000 Value ETF (IWD - Free Report) and the Vanguard Value ETF (VTV - Free Report) track a similar index. While iShares Russell 1000 Value ETF has $50.48 billion in assets, Vanguard Value ETF has $102.39 billion. IWD has an expense ratio of 0.18% and VTV charges 0.04%.
Bottom-Line
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.
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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Should Invesco Dividend Achievers ETF (PFM) Be on Your Investing Radar?
The Invesco Dividend Achievers ETF (PFM - Free Report) was launched on 09/15/2005, and is a passively managed exchange traded fund designed to offer broad exposure to the Large Cap Value segment of the US equity market.
The fund is sponsored by Invesco. It has amassed assets over $669.27 million, making it one of the average sized ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Companies that fall in the large cap category tend to have a market capitalization above $10 billion. Considered a more stable option, large cap companies boast more predictable cash flows and are less volatile than their mid and small cap counterparts.
Value stocks have lower than average price-to-earnings and price-to-book ratios. They also have lower than average sales and earnings growth rates. Looking at their long-term performance, value stocks have outperformed growth stocks in almost all markets. They are however likely to underperform growth stocks in strong bull markets.
Costs
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 0.52%, making it one of the more expensive products in the space.
It has a 12-month trailing dividend yield of 1.91%.
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.
This ETF has heaviest allocation to the Financials sector--about 17.30% of the portfolio. Information Technology and Healthcare round out the top three.
Looking at individual holdings, Microsoft Corp (MSFT - Free Report) accounts for about 3.95% of total assets, followed by Unitedhealth Group Inc (UNH - Free Report) and Johnson & Johnson (JNJ - Free Report) .
The top 10 holdings account for about 24.11% of total assets under management.
Performance and Risk
PFM seeks to match the performance of the NASDAQ US Broad Dividend Achievers Index before fees and expenses. The NASDAQ US Broad Dividend Achievers Index is designed to identify a diversified group of dividend-paying companies which have increased their annual dividend for 10 or more consecutive fiscal years.
The ETF has added roughly 2.08% so far this year and is down about -2.25% in the last one year (as of 04/24/2023). In the past 52-week period, it has traded between $32.34 and $38.02.
The ETF has a beta of 0.83 and standard deviation of 15.88% for the trailing three-year period, making it a medium risk choice in the space. With about 373 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco Dividend Achievers ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, PFM is an excellent option for investors seeking exposure to the Style Box - Large Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Russell 1000 Value ETF (IWD - Free Report) and the Vanguard Value ETF (VTV - Free Report) track a similar index. While iShares Russell 1000 Value ETF has $50.48 billion in assets, Vanguard Value ETF has $102.39 billion. IWD has an expense ratio of 0.18% and VTV charges 0.04%.
Bottom-Line
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.
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.