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Should You Invest in the Invesco S&P SmallCap Energy ETF (PSCE)?

Launched on 04/07/2010, the Invesco S&P SmallCap Energy ETF (PSCE) is a passively managed exchange traded fund designed to provide a broad exposure to the Energy - 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. Energy - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 15, placing it in bottom 6%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $201 million, making it one of the average sized ETFs attempting to match the performance of the Energy - Broad segment of the equity market. PSCE seeks to match the performance of the S&P SmallCap 600 Capped Energy Index before fees and expenses.

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The S&P SmallCap 600 Capped Energy Index is designed to measure the overall performance of common stocks of US energy companies.

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 0.29%, making it one of the least expensive products in the space.

It has a 12-month trailing dividend yield of 2.42%.

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.

Looking at individual holdings, Helmerich & Payne Inc accounts for about 9% of total assets, followed by Civitas Resources Inc and Sm Energy Co.

The top 10 holdings account for about 58.36% of total assets under management.

Performance and Risk

The ETF has lost about -6.89% so far this year and is down about -22.52% in the last one year (as of 06/08/2023). In that past 52-week period, it has traded between $7.87 and $11.95.

The ETF has a beta of 1.95 and standard deviation of 49.91% 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.

Alternatives

Invesco S&P SmallCap Energy 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, PSCE is a great option for investors seeking exposure to the Energy ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.

Vanguard Energy ETF (VDE) tracks MSCI US Investable Market Energy 25/50 Index and the Energy Select Sector SPDR ETF (XLE) tracks Energy Select Sector Index. Vanguard Energy ETF has $7.47 billion in assets, Energy Select Sector SPDR ETF has $35.61 billion. VDE has an expense ratio of 0.10% and XLE charges 0.10%.

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.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Invesco S&P SmallCap Energy ETF (PSCE): ETF Research Reports

Energy Select Sector SPDR ETF (XLE): ETF Research Reports

Vanguard Energy ETF (VDE): ETF Research Reports

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Zacks Investment Research