If you're interested in broad exposure to the Large Cap Growth segment of the US equity market, look no further than the Invesco Defensive Equity ETF (DEF), a passively managed exchange traded fund launched on 12/15/2006.
The fund is sponsored by Invesco. It has amassed assets over $242.06 M, making it one of the average sized ETFs attempting to match the Large Cap Growth segment of the US equity market.
Why Large Cap Growth
Companies that fall in the large cap category tend to have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.
Growth stocks have higher than average sales and earnings growth rates. While these are expected to grow faster than the broader market, they also have higher valuations. Also, growth stocks are a type of equity that carries more risk compared to others. Compared to value stocks, growth stocks are a safer bet in a strong bull market, but don't perform as strongly in almost all other financial environments.
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.59%, putting it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 1.14%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Financials sector--about 20.20% of the portfolio. Information Technology and Healthcare round out the top three.
Looking at individual holdings, Oracle Corp (ORCL) accounts for about 1.08% of total assets, followed by Ihs Markit Ltd (INFO) and Home Depot Inc/the (HD).
The top 10 holdings account for about 10.41% of total assets under management.
Performance and Risk
DEF seeks to match the performance of the Guggenheim Defensive Equity Index before fees and expenses. The Guggenheim Defensive Equity Index is comprised of approximately 100 stocks selected from the S&P 500 Index based on investment and other screening criteria. The companies selected have potentially superior risk-return profiles during periods of stock market weakness while still offering the potential for gains during periods of market strength.
The ETF has added roughly 22.14% so far this year and it's up approximately 14.34% in the last one year (as of 07/17/2019). In the past 52-week period, it has traded between $41.71 and $53.97.
The ETF has a beta of 0.77 and standard deviation of 10.89% for the trailing three-year period, making it a medium risk choice in the space. With about 100 holdings, it effectively diversifies company-specific risk.
Invesco Defensive Equity ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, DEF is an excellent option for investors seeking exposure to the Style Box - Large Cap Growth segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Russell 1000 Growth ETF (IWF) and the Invesco QQQ (QQQ) track a similar index. While iShares Russell 1000 Growth ETF has $46.23 B in assets, Invesco QQQ has $76.25 B. IWF has an expense ratio of 0.20% and QQQ charges 0.20%.
Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.
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 Defensive Equity ETF (DEF): ETF Research Reports
IHS Markit Ltd. (INFO) : Free Stock Analysis Report
The Home Depot, Inc. (HD) : Free Stock Analysis Report
Oracle Corporation (ORCL) : Free Stock Analysis Report
iShares Russell 1000 Growth ETF (IWF): ETF Research Reports
Invesco QQQ (QQQ): ETF Research Reports
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