If you’re interested in broad exposure to the Large Cap Value segment of the US equity market, look no further than the Invesco Dividend Achievers ETF (PFM), a passively managed exchange traded fund launched on 09/15/2005.
The fund is sponsored by Invesco. It has amassed assets over $643.27 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
Companies that fall in the large cap category tend to have a market capitalization above $10 billion. They tend to be stable companies with predictable cash flows and are usually less volatile than mid and small cap companies.
Value stocks are known for their lower than average price-to-earnings and price-to-book ratios, but investors should also note their 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
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.53%, making it one of the more expensive products in the space.
It has a 12-month trailing dividend yield of 1.63%.
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 to the Information Technology sector–about 16.70% of the portfolio. Financials and Consumer Staples round out the top three.
Looking at individual holdings, Microsoft Corp (MSFT) accounts for about 3.89% of total assets, followed by Jpmorgan Chase & Co (JPM) and Johnson & Johnson (JNJ).
The top 10 holdings account for about 25.87% of total assets under management.
Performance and Risk
PFM seeks to match the performance of the NASDAQ US Broad Dividend Achievers Index before fees and expenses. The NASDAQ US Broad Dividend Achievers Index is designed to identify a diversified group of dividend-paying companies which have increased their annual dividend for 10 or more consecutive fiscal years.
The ETF has added about 13.19% so far this year and is up roughly 33.72% in the last one year (as of 06/14/2021). In the past 52-week period, it has traded between $27.37 and $36.84.
The ETF has a beta of 0.85 and standard deviation of 20.04% for the trailing three-year period, making it a medium risk choice in the space. With about 352 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco Dividend Achievers 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, PFM is a great option for investors seeking exposure to the Style Box – Large Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Russell 1000 Value ETF (IWD) and the Vanguard Value ETF (VTV) track a similar index. While iShares Russell 1000 Value ETF has $54.81 billion in assets, Vanguard Value ETF has $80.05 billion. IWD has an expense ratio of 0.19% and VTV charges 0.04%.
Bottom-Line
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.
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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