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Is Invesco DB Oil Fund (DBO) a Hot ETF Right Now?

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Making its debut on 01/05/2007, smart beta exchange traded fund Invesco DB Oil Fund (DBO) provides investors broad exposure to the Energy ETFs category of the market.

What Are Smart Beta ETFs?

Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.

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.

There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track non-cap weighted strategies.

These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.

The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.

Fund Sponsor & Index

The fund is sponsored by Invesco. It has amassed assets over $457.59 M, making it one of the larger ETFs in the Energy ETFs. DBO, before fees and expenses, seeks to match the performance of the DBIQ Optimum Yield Crude Oil Index Excess Return.

The DBIQ Optimum Yield Crude Oil Index Excess Return Index is a rules-based index composed of futures contracts on Light Sweet Crude Oil (WTI) and is intended to reflect the performance of crude oil.

Cost & Other Expenses

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 cousins, other things remaining the same.

With on par with most peer products in the space, this ETF has annual operating expenses of 0.75%.

The fund has a 12-month trailing dividend yield of 0%.

Sector Exposure and Top Holdings

ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

Its top 10 holdings account for approximately 99.92% of DBO's total assets under management.

Performance and Risk

The fund's year-to-date return has added roughly 19.90%, and is up about 44.19% in the last one year (as of 08/03/2018). DBO has traded between $8.03 and $12.64 in the past 52-week period.

The fund has a beta of 0.77 and standard deviation of 30.43% for the trailing three-year period, which makes DBO a high choice in this particular space. With about 1 holdings, it has more concentrated exposure than peers.

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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PWRSH-DB OIL FD (DBO): ETF Research Reports

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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