Should You Invest in the Invesco S&P SmallCap Energy ETF (PSCE)?
The Invesco S&P SmallCap Energy ETF (PSCE) was launched on 04/07/2010, and is a passively managed exchange traded fund designed to offer broad exposure to the Energy - Broad segment of the equity market.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Energy - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 16, placing it in bottom 0%.
Index Details
The fund is sponsored by Invesco. It has amassed assets over $222.44 million, making it one of the average sized ETFs attempting to match the performance of the Energy - Broad segment of the equity market. PSCE seeks to match the performance of the S&P SmallCap 600 Capped Energy Index before fees and expenses.
The S&P SmallCap 600 Capped Energy Index is designed to measure the overall performance of common stocks of US energy companies.
Costs
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.29%, making it one of the least expensive products in the space.
It has a 12-month trailing dividend yield of 2.59%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Energy sector--about 99.40% of the portfolio.
Looking at individual holdings, Sm Energy Co (SM) accounts for about 9.02% of total assets, followed by Helmerich & Payne Inc (HP) and Patterson-Uti Energy Inc (PTEN).
The top 10 holdings account for about 60.91% of total assets under management.
Performance and Risk
The ETF has lost about -0.72% so far this year and is up about 7.64% in the last one year (as of 02/22/2024). In that past 52-week period, it has traded between $41.70 and $59.33.
The ETF has a beta of 1.78 and standard deviation of 42.85% 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.
Alternatives
Invesco S&P SmallCap Energy 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, PSCE is an outstanding option for investors seeking exposure to the Energy ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
Vanguard Energy ETF (VDE) tracks MSCI US Investable Market Energy 25/50 Index and the Energy Select Sector SPDR ETF (XLE) tracks Energy Select Sector Index. Vanguard Energy ETF has $8.26 billion in assets, Energy Select Sector SPDR ETF has $35.86 billion. VDE has an expense ratio of 0.10% and XLE charges 0.10%.
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 S&P SmallCap Energy ETF (PSCE): ETF Research Reports
Patterson-UTI Energy, Inc. (PTEN) : Free Stock Analysis Report
Helmerich & Payne, Inc. (HP) : Free Stock Analysis Report
SM Energy Company (SM) : Free Stock Analysis Report
Energy Select Sector SPDR ETF (XLE): ETF Research Reports
Vanguard Energy ETF (VDE): ETF Research Reports
