Is Invesco Food & Beverage ETF (PBJ) a Strong ETF Right Now?
The Invesco Food & Beverage ETF (PBJ) made its debut on 06/23/2005, and is a smart beta exchange traded fund that provides broad exposure to the Consumer Staples ETFs category of the market.
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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.
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
PBJ is managed by Invesco, and this fund has amassed over $235.97 million, which makes it one of the average sized ETFs in the Consumer Staples ETFs. Before fees and expenses, PBJ seeks to match the performance of the Dynamic Food & Beverage Intellidex Index.
The Dynamic Food & Beverage Intellidex Index is comprised of stocks of 30 U.S. food and beverage companies.These are companies that are principally engaged in the manufacture, sale or distribution of food and beverage products, agricultural products and products related to the development of new food technologies.
Cost & Other Expenses
When considering an ETF's total return, expense ratios are an important factor. And, cheaper funds can significantly outperform their more expensive cousins in the long term if all other factors remain equal.
Operating expenses on an annual basis are 0.63% for PBJ, making it on par with most peer products in the space.
PBJ's 12-month trailing dividend yield is 2.41%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
PBJ's heaviest allocation is in the Consumer Staples sector, which is about 95% of the portfolio.
Looking at individual holdings, Archer-Daniels-Midland Co (ADM) accounts for about 5.59% of total assets, followed by Pepsico Inc (PEP) and Kroger Co/the (KR).
The top 10 holdings account for about 45.23% of total assets under management.
Performance and Risk
The ETF has lost about -2.94% and is down about -3.03% so far this year and in the past one year (as of 09/12/2023), respectively. PBJ has traded between $42.01 and $48.41 during this last 52-week period.
PBJ has a beta of 0.63 and standard deviation of 14.62% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 31 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco Food & Beverage ETF is a reasonable option for investors seeking to outperform the Consumer Staples ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
VanEck Future of Food ETF (YUMY) tracks ---------------------------------------- and the First Trust NASDAQ Food & Beverage ETF (FTXG) tracks Nasdaq US Smart Food & Beverage Index. VanEck Future of Food ETF has $2.44 million in assets, First Trust NASDAQ Food & Beverage ETF has $945.89 million. YUMY has an expense ratio of 0.69% and FTXG charges 0.60%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Consumer Staples ETFs.
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 Food & Beverage ETF (PBJ): ETF Research Reports
Archer Daniels Midland Company (ADM) : Free Stock Analysis Report
PepsiCo, Inc. (PEP) : Free Stock Analysis Report
The Kroger Co. (KR) : Free Stock Analysis Report
First Trust NASDAQ Food & Beverage ETF (FTXG): ETF Research Reports
VanEck Future of Food ETF (YUMY): ETF Research Reports
