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Is Invesco High Yield Equity Dividend Achievers ETF (PEY) a Strong ETF Right Now?
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A smart beta exchange traded fund, the Invesco High Yield Equity Dividend Achievers ETF (PEY - Free Report) debuted on 12/09/2004, and offers broad exposure to the Style Box - All Cap Value category of the market.
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.
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.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other 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 sponsored by Invesco. It has amassed assets over $1.22 billion, making it one of the largest ETFs in the Style Box - All Cap Value. This particular fund seeks to match the performance of the NASDAQ US Dividend Achievers 50 Index before fees and expenses.
The NASDAQ US Dividend Achievers 50 Index is comprised of 50 stocks selected principally on the basis of dividend yield and consistent growth in dividends.
Cost & Other Expenses
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 cousins, other things remaining the same.
Annual operating expenses for PEY are 0.52%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 4.74%.
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.
Representing 25% of the portfolio, the fund has heaviest allocation to the Financials sector; Utilities and Consumer Staples round out the top three.
Taking into account individual holdings, Altria Group Inc (MO - Free Report) accounts for about 3.81% of the fund's total assets, followed by First Interstate Bancsystem Inc (FIBK - Free Report) and Cogent Communications Holdings Inc (CCOI - Free Report) .
The top 10 holdings account for about 28.02% of total assets under management.
Performance and Risk
The ETF has added roughly 4.85% and was up about 20.65% so far this year and in the past one year (as of 10/08/2024), respectively. PEY has traded between $18 and $21.93 during this last 52-week period.
PEY has a beta of 0.85 and standard deviation of 16.53% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 52 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco High Yield Equity Dividend Achievers ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
Capital Group Dividend Value ETF (CGDV - Free Report) tracks ---------------------------------------- and the iShares Core S&P U.S. Value ETF (IUSV - Free Report) tracks S&P 900 Value Index. Capital Group Dividend Value ETF has $10.96 billion in assets, iShares Core S&P U.S. Value ETF has $19.14 billion. CGDV has an expense ratio of 0.33% and IUSV charges 0.04%.
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 - All Cap Value.
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 High Yield Equity Dividend Achievers ETF (PEY) a Strong ETF Right Now?
A smart beta exchange traded fund, the Invesco High Yield Equity Dividend Achievers ETF (PEY - Free Report) debuted on 12/09/2004, and offers broad exposure to the Style Box - All Cap Value category of the market.
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.
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.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other 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 sponsored by Invesco. It has amassed assets over $1.22 billion, making it one of the largest ETFs in the Style Box - All Cap Value. This particular fund seeks to match the performance of the NASDAQ US Dividend Achievers 50 Index before fees and expenses.
The NASDAQ US Dividend Achievers 50 Index is comprised of 50 stocks selected principally on the basis of dividend yield and consistent growth in dividends.
Cost & Other Expenses
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 cousins, other things remaining the same.
Annual operating expenses for PEY are 0.52%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 4.74%.
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.
Representing 25% of the portfolio, the fund has heaviest allocation to the Financials sector; Utilities and Consumer Staples round out the top three.
Taking into account individual holdings, Altria Group Inc (MO - Free Report) accounts for about 3.81% of the fund's total assets, followed by First Interstate Bancsystem Inc (FIBK - Free Report) and Cogent Communications Holdings Inc (CCOI - Free Report) .
The top 10 holdings account for about 28.02% of total assets under management.
Performance and Risk
The ETF has added roughly 4.85% and was up about 20.65% so far this year and in the past one year (as of 10/08/2024), respectively. PEY has traded between $18 and $21.93 during this last 52-week period.
PEY has a beta of 0.85 and standard deviation of 16.53% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 52 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco High Yield Equity Dividend Achievers ETF is a reasonable option for investors seeking to outperform the Style Box - All Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
Capital Group Dividend Value ETF (CGDV - Free Report) tracks ---------------------------------------- and the iShares Core S&P U.S. Value ETF (IUSV - Free Report) tracks S&P 900 Value Index. Capital Group Dividend Value ETF has $10.96 billion in assets, iShares Core S&P U.S. Value ETF has $19.14 billion. CGDV has an expense ratio of 0.33% and IUSV charges 0.04%.
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 - All Cap Value.
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.