A Leisure & Entertainment ETF For December
This article was originally published on ETFTrends.com.
The arrival of each new month brings with sector-level opportunities that have historically proven rewarding. Many investors often think of retail stocks and exchange traded funds as being solid ideas at this time of year, but another corner of the consumer discretionary sector could deliver during the holiday season.
The Invesco Dynamic Leisure and Entertainment Portfolio (PEJ) is an ETF that often performs well in the month of December.
PEJ targets the Dynamic Leisure & Entertainment Intellidex Index. That benchmark “is designed to provide capital appreciation by thoroughly evaluating companies based on a variety of investment merit criteria, including: price momentum, earnings momentum, quality, management action, and value,” according to Invesco.
“Historical data indicates that one exchange-traded fund (ETF) in particular tends to shine in the final month of the year: the Invesco Dynamic Leisure and Entertainment ETF (PEJ),” according to Schaeffer's Investment Research.
Impressive Data
Over the past 10 years, PEJ generated positive December returns in nine of those returns with an average gain of 3.49% over that decade, according to Schaeffer's data. PEJ's average gain over that span is more than 30 basis points ahead of the second-best ETF on that list.
PEJ holds 30 stocks, but is not purely dedicated to consumer discretionary names. Several of the ETF's top 10 holdings are airlines.
Related: Smart Beta ETFs Make Some Quality Calls
Some analysts and market observers anticipate continued strength for the airline industry. For example, Goldman Sachs anticipates strong revenue trends in 2019 to coincide with a heightened focus on cost controls, according to Seeking Alpha. Citi sees sector strength in the U.S., which could help offset unit revenue pressure in international markets.
“PEJ is already set to wrap up November with its biggest monthly gain since May, up nearly 3% so far. Further, the ETF is set to topple its 10-week moving average for the first time since late September, before the shares pulled back to test the round-number $40 region, which acted as a floor in 2017,” according to Schaeffer's.
Dow component Walt Disney Co. (DIS), PEJ's third-largest holding, is another consumer discretionary name with a reputation for performing well in the last month of the year.
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