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Should You Invest in the Invesco DWA Utilities Momentum ETF (PUI)?

Zacks Equity Research

The Invesco DWA Utilities Momentum ETF (PUI) was launched on 10/26/2005, and is a passively managed exchange traded fund designed to offer broad exposure to the Utilities - Broad segment of the equity market.

Retail and institutional investors increasingly turn to passively managed ETFs because they offer low costs, transparency, flexibility, and tax efficiency; these kind of funds are also excellent vehicles for long term investors.

Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Utilities - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 4, placing it in top 25%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $281.81 M, making it one of the average sized ETFs attempting to match the performance of the Utilities - Broad segment of the equity market. PUI seeks to match the performance of the DWA Utilities Technical Leaders Index before fees and expenses.

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The DWA Utilities Technical Leaders Index identifies companies that are showing 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

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 0.60%, making it one of the more expensive products in the space.

It has a 12-month trailing dividend yield of 1.60%.

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 Utilities sector--about 96.70% of the portfolio.

Looking at individual holdings, American Water Works Co Inc (AWK) accounts for about 3.89% of total assets, followed by Nisource Inc (NI) and Nextera Energy Inc (NEE).

The top 10 holdings account for about 36.08% of total assets under management.

Performance and Risk

The ETF has gained about 19.57% and is up about 21.17% so far this year and in the past one year (as of 10/30/2019), respectively. PUI has traded between $28.07 and $35.16 during this last 52-week period.

The ETF has a beta of 0.24 and standard deviation of 13.35% for the trailing three-year period, making it a medium risk choice in the space. With about 36 holdings, it has more concentrated exposure than peers.

Alternatives

Invesco DWA Utilities Momentum 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, PUI is a good option for those seeking exposure to the Utilities/Infrastructure ETFs area of the market. Investors might also want to consider some other ETF options in the space.

Vanguard Utilities ETF (VPU) tracks MSCI US Investable Market Utilities 25/50 Index and the Utilities Select Sector SPDR Fund (XLU) tracks Utilities Select Sector Index. Vanguard Utilities ETF has $4.28 B in assets, Utilities Select Sector SPDR Fund has $10.92 B. VPU has an expense ratio of 0.10% and XLU charges 0.13%.

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 DWA Utilities Momentum ETF (PUI): ETF Research Reports
 
NextEra Energy, Inc. (NEE) : Free Stock Analysis Report
 
NiSource, Inc (NI) : Free Stock Analysis Report
 
American Water Works Company, Inc. (AWK) : Free Stock Analysis Report
 
Utilities Select Sector SPDR Fund (XLU): ETF Research Reports
 
Vanguard Utilities ETF (VPU): ETF Research Reports
 
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Zacks Investment Research