A smart beta exchange traded fund, the Invesco DB Energy Fund (DBE) debuted on 01/05/2007, and offers broad exposure to the Energy ETFs category of the U.S. equity market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
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.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is managed by Invesco, and has been able to amass over $233.22 M, which makes it the largest ETF in the Energy ETFs. DBE seeks to match the performance of the DBIQ Optimum Yield Energy Index Excess Return before fees and expenses.
The DBIQ Optimum Yield Energy Index Excess Return Index is a rules-based index composed of futures contracts on some of the most heavily traded energy commodities in the world: Light Sweet Crude Oil (WTI); Heating Oil; Brent Crude Oil; RBOB Gasoline; & Natural Gas. It is intended to reflect the performance of the energy sector.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for DBE are 0.75%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0%.
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.
Taking into account individual holdings, United States Treasury Bill accounts for about 26.72% of the fund's total assets, followed by Nymex Light Sweet Crude Oil Future (CLH9) and United States Treasury Bill.
DBE's top 10 holdings account for about 192.8% of its total assets under management.
Performance and Risk
The ETF return is roughly 16.31% so far this year and was up about 48.64% in the last one year (as of 07/06/2018). In the past 52-week period, it has traded between $11.19 and $17.29.
DBE has a beta of 0.68 and standard deviation of 25.89% for the trailing three-year period, which makes the fund a high choice in the space. With about 12 holdings, it has more concentrated exposure than peers.
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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PWRSH-DB EGY FD (DBE): ETF Research Reports
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