Launched on 09/15/2005, the Invesco Dividend Achievers ETF (PFM) is a passively managed exchange traded fund designed to provide a broad exposure to the Large Cap Value segment of the US equity market.
The fund is sponsored by Invesco. It has amassed assets over $649 million, making it one of the average sized ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Large cap companies typically have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.
Value stocks are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their lower than average sales and earnings growth rates. Considering long-term performance, value stocks have outperformed growth stocks in almost all markets; however, they are more likely to underperform growth stocks in strong bull markets.
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.
Annual operating expenses for this ETF are 0.53%, making it one of the more expensive products in the space.
It has a 12-month trailing dividend yield of 1.74%.
Sector Exposure and Top Holdings
It is important to delve into an ETF’s holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Information Technology sector–about 17.60% of the portfolio. Financials and Healthcare round out the top three.
Looking at individual holdings, Microsoft Corp (MSFT) accounts for about 4.44% of total assets, followed by Jpmorgan Chase & Co (JPM) and Johnson & Johnson (JNJ).
The top 10 holdings account for about 26.34% of total assets under management.
Performance and Risk
PFM seeks to match the performance of the NASDAQ US Broad Dividend Achievers Index before fees and expenses. The NASDAQ US Broad Dividend Achievers Index is designed to identify a diversified group of dividend-paying companies which have increased their annual dividend for 10 or more consecutive fiscal years.
The ETF has added about 13.76% so far this year and it’s up approximately 20.62% in the last one year (as of 10/06/2021). In the past 52-week period, it has traded between $29.52 and $38.
The ETF has a beta of 0.85 and standard deviation of 20.27% for the trailing three-year period, making it a medium risk choice in the space. With about 352 holdings, it effectively diversifies company-specific risk.
Invesco Dividend Achievers ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, PFM is a reasonable option for those seeking exposure to the Style Box – Large Cap Value area of the market. Investors might also want to consider some other ETF options in the space.
The iShares Russell 1000 Value ETF (IWD) and the Vanguard Value ETF (VTV) track a similar index. While iShares Russell 1000 Value ETF has $53.92 billion in assets, Vanguard Value ETF has $82.97 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
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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