Is Invesco Dynamic Large Cap Growth ETF (PWB) a Strong ETF Right Now?
Designed to provide broad exposure to the Style Box - Large Cap Growth category of the market, the Invesco Dynamic Large Cap Growth ETF (PWB) is a smart beta exchange traded fund launched on 03/03/2005.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.
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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
The fund is sponsored by Invesco. It has amassed assets over $592.13 million, making it one of the average sized ETFs in the Style Box - Large Cap Growth. This particular fund, before fees and expenses, seeks to match the performance of the Dynamic Large Cap Growth Intellidex Index.
The Dynamic Large Cap Growth Intellidex Index is designed to provide capital appreciation while maintaining consistent stylistically accurate exposure.
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 PWB are 0.55%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.29%.
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.
PWB's heaviest allocation is in the Information Technology sector, which is about 37.80% of the portfolio. Its Consumer Discretionary and Energy round out the top three.
When you look at individual holdings, Broadcom Inc (AVGO) accounts for about 3.75% of the fund's total assets, followed by Nextera Energy Inc (NEE) and Microsoft Corp (MSFT).
Its top 10 holdings account for approximately 31.47% of PWB's total assets under management.
Performance and Risk
The ETF has gained about 6.56% so far this year and is down about -7.99% in the last one year (as of 02/20/2023). In the past 52-week period, it has traded between $56.26 and $74.18.
The ETF has a beta of 1 and standard deviation of 28.28% for the trailing three-year period, making it a medium risk choice in the space. With about 52 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco Dynamic Large Cap Growth ETF is an excellent option for investors seeking to outperform the Style Box - Large Cap Growth segment of the market. There are other ETFs in the space which investors could consider as well.
Vanguard Growth ETF (VUG) tracks CRSP U.S. Large Cap Growth Index and the Invesco QQQ (QQQ) tracks NASDAQ-100 Index. Vanguard Growth ETF has $76.85 billion in assets, Invesco QQQ has $160.92 billion. VUG has an expense ratio of 0.04% and QQQ charges 0.20%.
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 - Large Cap Growth.
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 Dynamic Large Cap Growth ETF (PWB): ETF Research Reports
NextEra Energy, Inc. (NEE) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
Broadcom Inc. (AVGO) : Free Stock Analysis Report
Invesco QQQ (QQQ): ETF Research Reports
Vanguard Growth ETF (VUG): ETF Research Reports
