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Is Invesco Water Resources ETF (PHO) a Strong ETF Right Now?
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Designed to provide broad exposure to the Industrials ETFs category of the market, the Invesco Water Resources ETF (PHO - Free Report) is a smart beta exchange traded fund launched on 12/06/2005.
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.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Managed by Invesco, PHO has amassed assets over $2.21 billion, making it one of the larger ETFs in the Industrials ETFs. This particular fund seeks to match the performance of the NASDAQ OMX US Water Index before fees and expenses.
The NASDAQ OMX US Water Index tracks the performance of US exchange-listed companies that create products designed to conserve and purify water for homes, businesses and industries.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.60% for this ETF, which makes it on par with most peer products in the space.
PHO's 12-month trailing dividend yield is 0.47%.
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.
Representing 57.90% of the portfolio, the fund has heaviest allocation to the Industrials sector; Utilities and Information Technology round out the top three.
Taking into account individual holdings, American Water Works Co Inc (AWK - Free Report) accounts for about 8.70% of the fund's total assets, followed by Ecolab Inc (ECL - Free Report) and Roper Technologies Inc (ROP - Free Report) .
Its top 10 holdings account for approximately 59.62% of PHO's total assets under management.
Performance and Risk
The ETF has added about 12.20% so far this year and was up about 25.37% in the last one year (as of 09/16/2024). In the past 52-week period, it has traded between $49.77 and $69.84.
The ETF has a beta of 0.98 and standard deviation of 19.39% for the trailing three-year period, making it a medium risk choice in the space. With about 40 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco Water Resources ETF is an excellent option for investors seeking to outperform the Industrials ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
Invesco S&P Global Water Index ETF (CGW - Free Report) tracks S&P GLOBAL WATER INDEX and the First Trust Water ETF (FIW - Free Report) tracks ISE Clean Edge Water Index. Invesco S&P Global Water Index ETF has $994.32 million in assets, First Trust Water ETF has $1.80 billion. CGW has an expense ratio of 0.56% and FIW charges 0.53%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Industrials 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 Water Resources ETF (PHO) a Strong ETF Right Now?
Designed to provide broad exposure to the Industrials ETFs category of the market, the Invesco Water Resources ETF (PHO - Free Report) is a smart beta exchange traded fund launched on 12/06/2005.
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.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Managed by Invesco, PHO has amassed assets over $2.21 billion, making it one of the larger ETFs in the Industrials ETFs. This particular fund seeks to match the performance of the NASDAQ OMX US Water Index before fees and expenses.
The NASDAQ OMX US Water Index tracks the performance of US exchange-listed companies that create products designed to conserve and purify water for homes, businesses and industries.
Cost & Other Expenses
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Operating expenses on an annual basis are 0.60% for this ETF, which makes it on par with most peer products in the space.
PHO's 12-month trailing dividend yield is 0.47%.
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.
Representing 57.90% of the portfolio, the fund has heaviest allocation to the Industrials sector; Utilities and Information Technology round out the top three.
Taking into account individual holdings, American Water Works Co Inc (AWK - Free Report) accounts for about 8.70% of the fund's total assets, followed by Ecolab Inc (ECL - Free Report) and Roper Technologies Inc (ROP - Free Report) .
Its top 10 holdings account for approximately 59.62% of PHO's total assets under management.
Performance and Risk
The ETF has added about 12.20% so far this year and was up about 25.37% in the last one year (as of 09/16/2024). In the past 52-week period, it has traded between $49.77 and $69.84.
The ETF has a beta of 0.98 and standard deviation of 19.39% for the trailing three-year period, making it a medium risk choice in the space. With about 40 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco Water Resources ETF is an excellent option for investors seeking to outperform the Industrials ETFs segment of the market. There are other ETFs in the space which investors could consider as well.
Invesco S&P Global Water Index ETF (CGW - Free Report) tracks S&P GLOBAL WATER INDEX and the First Trust Water ETF (FIW - Free Report) tracks ISE Clean Edge Water Index. Invesco S&P Global Water Index ETF has $994.32 million in assets, First Trust Water ETF has $1.80 billion. CGW has an expense ratio of 0.56% and FIW charges 0.53%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Industrials 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.