Launched on 06/23/2005, the Invesco Leisure and Entertainment ETF (PEJ) is a passively managed exchange traded fund designed to provide a broad exposure to the Consumer Discretionary - Leisure and Entertainment segment of the equity market.
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
Investor-friendly, sector ETFs provide many options to gain low risk and diversified exposure to a broad group of companies in particular sectors. Consumer Discretionary - Leisure and Entertainment is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 12, placing it in bottom 25%.
The fund is sponsored by Invesco. It has amassed assets over $308.92 million, making it one of the larger ETFs attempting to match the performance of the Consumer Discretionary - Leisure and Entertainment segment of the equity market. PEJ seeks to match the performance of the Dynamic Leisure & Entertainment Intellidex Index before fees and expenses.
The Dynamic Leisure & Entertainment Intellidex Index is comprised of stocks of U.S. leisure and entertainment companies. The Index is designed to provide capital appreciation by thoroughly evaluating companies based on a variety of investment merit criteria, including fundamental growth, stock valuation, investment timeliness and risk factors.
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 0.58%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.47%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Consumer Discretionary sector--about 46.20% of the portfolio. Telecom and Industrials round out the top three.
Looking at individual holdings, Royal Caribbean Cruises Ltd (RCL) accounts for about 5.43% of total assets, followed by Warner Bros Discovery Inc (WBD) and Airbnb Inc (ABNB).
The top 10 holdings account for about 46.60% of total assets under management.
Performance and Risk
The ETF has lost about -2.03% and it's up approximately 1.83% so far this year and in the past one year (as of 01/23/2024), respectively. PEJ has traded between $34.95 and $43.23 during this last 52-week period.
The ETF has a beta of 1.34 and standard deviation of 24.87% for the trailing three-year period, making it a high risk choice in the space. With about 32 holdings, it has more concentrated exposure than peers.
Invesco Leisure and Entertainment ETF sports a Zacks ETF Rank of 4 (Sell), which is based on expected asset class return, expense ratio, and momentum, among other factors. PEJ, then, is not a suitable option for investors seeking exposure to the Consumer Discretionary ETFs segment of the market. Instead, there are better ETFs in the space to consider.
Global X Video Games & Esports ETF (HERO) tracks SOLACTIVE VIDEO GAMES & ESPORTS INDEX and the VanEck Video Gaming and eSports ETF (ESPO) tracks MVIS GLOBAL VIDEO GAMING AND ESPORTS IND. Global X Video Games & Esports ETF has $124.87 million in assets, VanEck Video Gaming and eSports ETF has $248.82 million. HERO has an expense ratio of 0.50% and ESPO charges 0.56%.
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.