The Invesco Dynamic Software ETF (PSJ) was launched on 06/23/2005, and is a passively managed exchange traded fund designed to offer broad exposure to the Technology - Software segment of the equity market.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Investor-friendly, sector ETFs provide many options to gain low risk and diversified exposure to a broad group of companies in particular sectors. Technology - Software is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 5, placing it in top 31%.
The fund is sponsored by Invesco. It has amassed assets over $488.78 M, making it one of the average sized ETFs attempting to match the performance of the Technology - Software segment of the equity market. PSJ seeks to match the performance of the Dynamic Software Intellidex Index before fees and expenses.
The index is comprised of stocks of software companies. The Index is designed to provide capital appreciation by thoroughly evaluating companies based on a variety of investment merit criteria, including fundamental growth, stock valuation, investment timeliness and risk factors.
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.
Annual operating expenses for this ETF are 0.58%, making it on par with most peer products in the space.
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.
This ETF has heaviest allocation in the Information Technology sector--about 90.20% of the portfolio.
Looking at individual holdings, Vmware Inc (VMW) accounts for about 5.84% of total assets, followed by Oracle Corp (ORCL) and Servicenow Inc (NOW).
The top 10 holdings account for about 47.01% of total assets under management.
Performance and Risk
The ETF has gained about 29.69% so far this year and is up roughly 24.45% in the last one year (as of 10/16/2019). In that past 52-week period, it has traded between $68.31 and $104.07.
The ETF has a beta of 1.13 and standard deviation of 21.02% for the trailing three-year period, making it a high risk choice in the space. With about 30 holdings, it has more concentrated exposure than peers.
Invesco Dynamic Software ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, PSJ is a great option for investors seeking exposure to the Technology ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
SPDR S&P Software & Services ETF (XSW) tracks S&P Software & Services Select Industry Index and the iShares Expanded Tech-Software Sector ETF (IGV) tracks S&P North American Technology-Software Index. SPDR S&P Software & Services ETF has $208.62 M in assets, iShares Expanded Tech-Software Sector ETF has $2.61 B. XSW has an expense ratio of 0.35% and IGV charges 0.46%.
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 Software ETF (PSJ): ETF Research Reports
ServiceNow, Inc. (NOW) : Free Stock Analysis Report
Oracle Corporation (ORCL) : Free Stock Analysis Report
VMware, Inc. (VMW) : Free Stock Analysis Report
iShares Expanded Tech-Software Sector ETF (IGV): ETF Research Reports
SPDR S&P Software & Services ETF (XSW): ETF Research Reports
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