Should You Invest in the Invesco DWA Basic Materials Momentum ETF (PYZ)?

The Invesco DWA Basic Materials Momentum ETF (PYZ) was launched on 10/12/2006, and is a passively managed exchange traded fund designed to offer broad exposure to the Materials - Broad 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. Materials - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 7, placing it in top 44%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $212.58 million, making it one of the average sized ETFs attempting to match the performance of the Materials - Broad segment of the equity market. PYZ seeks to match the performance of the DWA Basic Materials Technical Leaders Index before fees and expenses.

The DWA Basic Materials Technical Leaders Index identifies companies that show relative strength and are composed of at least 30 common stocks from a universe of approximately 3,000 common stocks traded on US exchanges.

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 0.60%, making it on par with most peer products in the space.

It has a 12-month trailing dividend yield of 0.67%.

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 in the Materials sector--about 90.70% of the portfolio.

Looking at individual holdings, Freeport-Mcmoran Inc (FCX) accounts for about 4.86% of total assets, followed by Avery Dennison Corp (AVY) and Alcoa Corp (AA).

The top 10 holdings account for about 40.83% of total assets under management.

Performance and Risk

The ETF has added roughly 30.91% so far this year and it's up approximately 81.46% in the last one year (as of 05/31/2021). In that past 52-week period, it has traded between $48.80 and $94.07.

The ETF has a beta of 1.40 and standard deviation of 31.54% for the trailing three-year period, making it a high risk choice in the space. With about 31 holdings, it has more concentrated exposure than peers.

Alternatives

Invesco DWA Basic Materials Momentum ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, PYZ is a great option for investors seeking exposure to the Materials ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.

FlexShares Morningstar Global Upstream Natural Resources ETF (GUNR) tracks Morningstar Global Upstream Natural Resources Index and the Materials Select Sector SPDR ETF (XLB) tracks Materials Select Sector Index. FlexShares Morningstar Global Upstream Natural Resources ETF has $5.47 billion in assets, Materials Select Sector SPDR ETF has $9.65 billion. GUNR has an expense ratio of 0.46% and XLB charges 0.12%.

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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INVS-DW BAS MT (PYZ): ETF Research Reports
 
Avery Dennison Corporation (AVY) : Free Stock Analysis Report
 
Alcoa Corp. (AA) : Free Stock Analysis Report
 
FreeportMcMoRan Inc. (FCX) : Free Stock Analysis Report
 
SPDR-MATLS SELS (XLB): ETF Research Reports
 
FLEXS-MRN GUNR (GUNR): ETF Research Reports
 
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