Should You Invest in the Invesco Dynamic Leisure and Entertainment ETF (PEJ)?

Launched on 06/23/2005, the Invesco Dynamic 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 9, placing it in bottom 44%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $206.19 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 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.

Costs

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 counterparts, other things remaining the same.

Annual operating expenses for this ETF are 0.63%, making it one of the more expensive products in the space.

It has a 12-month trailing dividend yield of 0.81%.

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 Consumer Discretionary sector--about 39.80% of the portfolio. Telecom and Industrials round out the top three.

Looking at individual holdings, Chipotle Mexican Grill Inc (CMG) accounts for about 8.71% of total assets, followed by Walt Disney Co/the (DIS) and Fox Corp (FOXA).

The top 10 holdings account for about 49.42% of total assets under management.

Performance and Risk

So far this year, PEJ has lost about -42.33%, and is down about -41.19% in the last one year (as of 05/29/2020). During this past 52-week period, the fund has traded between $19.69 and $45.60.

The ETF has a beta of 1.28 and standard deviation of 28.87% for the trailing three-year period, making it a high risk choice in the space. With about 30 holdings, it has more concentrated exposure than peers.

Alternatives

Invesco Dynamic Leisure and Entertainment ETF carries a Zacks ETF Rank of 3 (Hold), which is based on expected asset class return, expense ratio, and momentum, among other factors. Thus, PEJ is a sufficient option for those seeking exposure to the Consumer Discretionary ETFs area of the market. Investors might also want to consider some other ETF options in the space.

Global X Video Games Esports ETF (HERO) tracks SOLACTIVE VIDEO GAMES & ESPORTS INDEX and the VanEck Vectors Video Gaming and eSports ETF (ESPO) tracks MVIS GLOBAL VIDEO GAMING AND ESPORTS IND. Global X Video Games Esports ETF has $108.57 million in assets, VanEck Vectors Video Gaming and eSports ETF has $214.98 million. HERO has an expense ratio of 0.50% and ESPO charges 0.55%.

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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Invesco Dynamic Leisure and Entertainment ETF (PEJ): ETF Research Reports
 
The Walt Disney Company (DIS) : Free Stock Analysis Report
 
Chipotle Mexican Grill, Inc. (CMG) : Free Stock Analysis Report
 
Global X Video Games Esports ETF (HERO): ETF Research Reports
 
Fox Corporation (FOXA) : Free Stock Analysis Report
 
VanEck Vectors Video Gaming and eSports ETF (ESPO): ETF Research Reports
 
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