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Is Invesco Leisure and Entertainment ETF (PEJ) a Strong ETF Right Now?
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The Invesco Leisure and Entertainment ETF (PEJ - Free Report) was launched on 06/23/2005, and is a smart beta exchange traded fund designed to offer broad exposure to the Consumer Discretionary ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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
PEJ is managed by Invesco, and this fund has amassed over $255.85 million, which makes 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 Dynamic Leisure & Entertainment Intellidex 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 0.58%, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 0.43%.
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.
For PEJ, it has heaviest allocation in the Consumer Discretionary sector --about 59.30% of the portfolio --while Telecom and Consumer Staples round out the top three.
Looking at individual holdings, Chipotle Mexican Grill Inc (CMG - Free Report) accounts for about 5.32% of total assets, followed by Hilton Worldwide Holdings Inc (HLT - Free Report) and Domino's Pizza Inc (DPZ - Free Report) .
PEJ's top 10 holdings account for about 46.16% of its total assets under management.
Performance and Risk
Year-to-date, the Invesco Leisure and Entertainment ETF has added about 8.87% so far, and was up about 6% over the last 12 months (as of 07/22/2024). PEJ has traded between $34.95 and $46.74 in this past 52-week period.
The ETF has a beta of 1.35 and standard deviation of 22.64% for the trailing three-year period, making it a high risk choice in the space. With about 31 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco 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 - Free Report) tracks SOLACTIVE VIDEO GAMES & ESPORTS INDEX and the VanEck Video Gaming and eSports ETF (ESPO - Free Report) tracks MVIS GLOBAL VIDEO GAMING AND ESPORTS IND. Global X Video Games & Esports ETF has $115.45 million in assets, VanEck Video Gaming and eSports ETF has $246.45 million. HERO has an expense ratio of 0.50% and ESPO charges 0.56%.
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.
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 Leisure and Entertainment ETF (PEJ) a Strong ETF Right Now?
The Invesco Leisure and Entertainment ETF (PEJ - Free Report) was launched on 06/23/2005, and is a smart beta exchange traded fund designed to offer broad exposure to the Consumer Discretionary ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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
PEJ is managed by Invesco, and this fund has amassed over $255.85 million, which makes 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 Dynamic Leisure & Entertainment Intellidex 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 0.58%, making it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 0.43%.
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.
For PEJ, it has heaviest allocation in the Consumer Discretionary sector --about 59.30% of the portfolio --while Telecom and Consumer Staples round out the top three.
Looking at individual holdings, Chipotle Mexican Grill Inc (CMG - Free Report) accounts for about 5.32% of total assets, followed by Hilton Worldwide Holdings Inc (HLT - Free Report) and Domino's Pizza Inc (DPZ - Free Report) .
PEJ's top 10 holdings account for about 46.16% of its total assets under management.
Performance and Risk
Year-to-date, the Invesco Leisure and Entertainment ETF has added about 8.87% so far, and was up about 6% over the last 12 months (as of 07/22/2024). PEJ has traded between $34.95 and $46.74 in this past 52-week period.
The ETF has a beta of 1.35 and standard deviation of 22.64% for the trailing three-year period, making it a high risk choice in the space. With about 31 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco 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 - Free Report) tracks SOLACTIVE VIDEO GAMES & ESPORTS INDEX and the VanEck Video Gaming and eSports ETF (ESPO - Free Report) tracks MVIS GLOBAL VIDEO GAMING AND ESPORTS IND. Global X Video Games & Esports ETF has $115.45 million in assets, VanEck Video Gaming and eSports ETF has $246.45 million. HERO has an expense ratio of 0.50% and ESPO charges 0.56%.
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.
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.