Should You Invest In The Invesco DWA Consumer Staples Momentum ETF (PSL)?

Designed to provide broad exposure to the Consumer Staples - Broad segment of the equity market, the Invesco DWA Consumer Staples Momentum ETF (PSL) is a passively managed exchange traded fund launched on 10/12/2006.

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.

Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Consumer Staples - Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 10, placing it in bottom 38%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $201.44 M, making it one of the average sized ETFs attempting to match the performance of the Consumer Staples - Broad segment of the equity market. PSL seeks to match the performance of the DWA Consumer Staples Technical Leaders Index before fees and expenses.

The DWA Consumer Staples 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

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 0.54%.

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 in the Consumer Staples sector--about 74.30% of the portfolio. Consumer Discretionary and Industrials round out the top three.

Looking at individual holdings, Tyson Foods Inc (NYSE:TSN) accounts for about 4.07% of total assets, followed by Constellation Brands Inc (NYSE:STZ) and Church & Dwight Co Inc (CHD).

The top 10 holdings account for about 36.15% of total assets under management.

Performance and Risk

The ETF has added about 8.73% so far this year and is down about -0.29% in the last one year (as of 10/03/2019). In that past 52-week period, it has traded between $62.43 and $75.95.

The ETF has a beta of 0.52 and standard deviation of 11.99% for the trailing three-year period, making it a medium risk choice in the space. With about 32 holdings, it has more concentrated exposure than peers.

Alternatives

Invesco DWA Consumer Staples Momentum ETF sports a Zacks ETF Rank of 4 (Sell), which is based on expected asset class return, expense ratio, and momentum, among other factors. PSL, then, is not the best option for investors seeking exposure to the Consumer Staples ETFs segment of the market. However, there are better ETFs in the space to consider.

Vanguard Consumer Staples ETF (VDC) tracks MSCI US Investable Market Consumer Staples 25/50 Index and the Consumer Staples Select Sector SPDR Fund (XLP) tracks Consumer Staples Select Sector Index. Vanguard Consumer Staples ETF has $5.24 B in assets, Consumer Staples Select Sector SPDR Fund has $13.75 B. VDC has an expense ratio of 0.10% and XLP 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.