The Invesco Leisure and Entertainment ETF (PEJ) 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?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
A good option for investors who believe in market efficiency, market cap weighted indexes offer 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.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of 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
The fund is managed by Invesco, and has been able to amass over $253.63 million, which makes it one of the average sized 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
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 0.57% for this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 0.24%.
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 Consumer Discretionary sector - about 46.2% of the portfolio. Telecom and Industrials round out the top three.
Taking into account individual holdings, Warner Bros Discovery Inc (WBD) accounts for about 5.84% of the fund's total assets, followed by United Airlines Holdings Inc (UAL) and Live Nation Entertainment Inc (LYV).
PEJ's top 10 holdings account for about 47.48% of its total assets under management.
Performance and Risk
The ETF return is roughly 0.28% so far this year and is up roughly 9.17% in the last one year (as of 02/11/2026). In the past 52-week period, it has traded between $42.84 and $62.19
The ETF has a beta of 1.12 and standard deviation of 20.10% for the trailing three-year period, making it a high risk choice in the space. With about 32 holdings, it has more concentrated exposure than peers .
Alternatives
Invesco Leisure and Entertainment ETF is not a suitable option for investors seeking to outperform the Consumer Discretionary ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
Global X Video Games & Esports ETF (HERO) tracks SOLACTIVE VIDEO GAMES & ESPORTS INDEX and the VanEck Video Gaming and eSports ETF (ESPO) tracks MVIS GLOBAL VIDEO GAMING AND ESPORTS IND. Global X Video Games & Esports ETF has $91.49 million in assets, VanEck Video Gaming and eSports ETF has $298.78 million. HERO has an expense ratio of 0.50% and ESPO changes 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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Invesco Leisure and Entertainment ETF (PEJ): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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