The Invesco High Yield Equity Dividend Achievers ETF (PEY) made its debut on 12/09/2004, and is a smart beta exchange traded fund that provides broad exposure to the Style Box - All Cap Value category of the market.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
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.
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
Because the fund has amassed over $1.07 billion, this makes it one of the largest ETFs in the Style Box - All Cap Value. PEY is managed by Invesco. PEY 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
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Annual operating expenses for this ETF are 0.53%, making it on par with most peer products in the space.
The fund has a 12-month trailing dividend yield of 4.75%.
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 in the Utilities sector - about 26.90% of the portfolio. Financials and Consumer Staples round out the top three.
When you look at individual holdings, Altria Group Inc (MO) accounts for about 3.59% of the fund's total assets, followed by Verizon Communications Inc (VZ) and Universal Corp/va (UVV).
The top 10 holdings account for about 28.07% of total assets under management.
Performance and Risk
Year-to-date, the Invesco High Yield Equity Dividend Achievers ETF has lost about -7.18% so far, and is up roughly 5.50% over the last 12 months (as of 04/18/2025). PEY has traded between $18.68 and $23.08 in this past 52-week period.
The fund has a beta of 0.73 and standard deviation of 17.53% for the trailing three-year period, which makes PEY a medium risk choice in this particular space. With about 51 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco High Yield Equity Dividend Achievers ETF is an excellent option for investors seeking to outperform the Style Box - All Cap Value segment of the market. There are other ETFs in the space which investors could consider as well.
Capital Group Dividend Value ETF (CGDV) tracks ---------------------------------------- and the iShares Core S&P U.S. Value ETF (IUSV) tracks S&P 900 Value Index. Capital Group Dividend Value ETF has $14.28 billion in assets, iShares Core S&P U.S. Value ETF has $18.98 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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Invesco High Yield Equity Dividend Achievers ETF (PEY): ETF Research Reports Verizon Communications Inc. (VZ): Free Stock Analysis Report Altria Group, Inc. (MO): Free Stock Analysis Report iShares Core S&P U.S. Value ETF (IUSV): ETF Research Reports Capital Group Dividend Value ETF (CGDV): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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