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A smart beta exchange traded fund, the Invesco Dynamic Large Cap Value ETF (PWV) debuted on 03/03/2005, and offers broad exposure to the Style Box - Large Cap Value category of the market.
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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
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.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
PWV is managed by Invesco, and this fund has amassed over $818.93 million, which makes it one of the average sized ETFs in the Style Box - Large Cap Value. Before fees and expenses, PWV seeks to match the performance of the Dynamic Large Cap Value Intellidex Index.
The Dynamic Large Cap Value Intellidex Index is designed to provide capital appreciation while maintaining consistent stylistically accurate exposure.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
With one of the more expensive products in the space, this ETF has annual operating expenses of 0.58%.
PWV's 12-month trailing dividend yield is 1.98%.
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.
For PWV, it has heaviest allocation in the Financials sector --about 25.90% of the portfolio --while Healthcare and Consumer Staples round out the top three.
Taking into account individual holdings, Exxon Mobil Corp (XOM) accounts for about 3.67% of the fund's total assets, followed by Johnson & Johnson (JNJ) and Walmart Inc (WMT).