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Designed to provide broad exposure to the Style Box - Large Cap Value category of the market, the Invesco Dynamic Large Cap Value ETF (PWV) is a smart beta exchange traded fund launched on 03/03/2005.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
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 $778.33 million, which makes it one of the average sized ETFs in the Style Box - Large Cap Value. PWV seeks to match the performance of the Dynamic Large Cap Value Intellidex Index before fees and expenses.
The Index is designed to provide capital appreciation while maintaining consistent stylistically accurate exposure.
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 0.56% for this ETF, which makes it one of the more expensive products in the space.
The fund has a 12-month trailing dividend yield of 1.85%.
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.
This ETF has heaviest allocation in the Financials sector - about 30.10% of the portfolio. Healthcare and Consumer Staples round out the top three.
Taking into account individual holdings, Exxon Mobil Corp (XOM) accounts for about 3.58% of the fund's total assets, followed by Comcast Corp (CMCSA) and Morgan Stanley (MS).
Its top 10 holdings account for approximately 34.26% of PWV's total assets under management.
Performance and Risk
The ETF has added roughly 25.57% and was up about 45.76% so far this year and in the past one year (as of 11/01/2021), respectively. PWV has traded between $33.74 and $47.47 during this last 52-week period.
PWV has a beta of 0.97 and standard deviation of 23.67% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 51 holdings, it effectively diversifies company-specific risk.
Invesco Dynamic Large Cap Value ETF is a reasonable option for investors seeking to outperform the Style Box - Large Cap Value segment of the market. However, there are other ETFs in the space which investors could consider.
IShares Russell 1000 Value ETF (IWD) tracks Russell 1000 Value Index and the Vanguard Value ETF (VTV) tracks CRSP U.S. Large Cap Value Index. IShares Russell 1000 Value ETF has $56.53 billion in assets, Vanguard Value ETF has $87.19 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.
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 Value.
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 Value ETF (PWV): ETF Research Reports
Morgan Stanley (MS) : Free Stock Analysis Report
Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
Comcast Corporation (CMCSA) : Free Stock Analysis Report
Vanguard Value ETF (VTV): ETF Research Reports
iShares Russell 1000 Value ETF (IWD): ETF Research Reports
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