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Launched on 03/21/2016, the Principal Value ETF (PY) is a passively managed exchange traded fund designed to provide a broad exposure to the Large Cap Value segment of the US equity market.
The fund is sponsored by Principal Funds. It has amassed assets over $283.29 million, making it one of the average sized ETFs attempting to match the Large Cap Value segment of the US equity market.
Why Large Cap Value
Large cap companies usually have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.
Carrying lower than average price-to-earnings and price-to-book ratios, value stocks also have lower than average sales and earnings growth rates. Considering long-term performance, value stocks have outperformed growth stocks in almost all markets; however, they are more likely to underperform growth stocks in strong bull markets.
Costs
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 0.15%, making it one of the cheaper products in the space.
It has a 12-month trailing dividend yield of 2.92%.
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 to the Financials sector--about 27% of the portfolio. Industrials and Information Technology round out the top three.
Looking at individual holdings, Altria Group Inc Common Stock Usd.333 (MO) accounts for about 3.25% of total assets, followed by Equitrans Midstream Corp Common Stock (ETRN) and Prudential Financial Inc Common Stock Usd.01 (PRU).
The top 10 holdings account for about 21.68% of total assets under management.
Performance and Risk
PY seeks to match the performance of the NASDAQ U.S. Shareholder Yield Index before fees and expenses. The NASDAQ U.S. Shareholder Yield Index provides exposure to equity securities of mid- and large-capitalization U.S. issuers. The index focuses on U.S. companies with sustainable shareholder yield, strong cash flow generation, and capacity to increase dividends and buybacks.
The ETF has lost about -5.96% so far this year and is down about -0.17% in the last one year (as of 05/24/2022). In the past 52-week period, it has traded between $40.50 and $45.34.