Yahoo Finance Is Invesco Global Water ETF (PIO) a Strong ETF Right Now?
The Invesco Global Water ETF (PIO) made its debut on 06/13/2007, and is a smart beta exchange traded fund that provides broad exposure to the Industrials ETFs category of the market.
What Are Smart Beta ETFs?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
Based on specific fundamental characteristics, or a combination of such, these indexes attempt to pick stocks that have a better chance of risk-return performance.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by Invesco, and has been able to amass over $278.10 million, which makes it one of the average sized ETFs in the Industrials ETFs. PIO, before fees and expenses, seeks to match the performance of the NASDAQ OMX Global Water Index.
The NASDAQ OMX Global Water Index is designed to track the performance of companies worldwide that are creating products that conserve and purify water for homes, businesses and industries.
Cost & Other Expenses
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.75%, making it one of the most expensive products in the space.
It has a 12-month trailing dividend yield of 0.79%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Taking into account individual holdings, Nomura Micro Science Co Ltd accounts for about 9.10% of the fund's total assets, followed by Pentair Plc (PNR) and Roper Technologies Inc (ROP).
The top 10 holdings account for about 57.22% of total assets under management.
Performance and Risk
The ETF has added about 4.09% and it's up approximately 20.67% so far this year and in the past one year (as of 05/31/2024), respectively. PIO has traded between $31.37 and $43.54 during this last 52-week period.
PIO has a beta of 1.03 and standard deviation of 18.28% for the trailing three-year period, which makes the fund a medium risk choice in the space. With about 47 holdings, it has more concentrated exposure than peers.
Alternatives
Invesco Global Water ETF is a reasonable option for investors seeking to outperform the Industrials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
First Trust Water ETF (FIW) tracks ISE Clean Edge Water Index and the Invesco Water Resources ETF (PHO) tracks NASDAQ OMX US Water Index. First Trust Water ETF has $1.69 billion in assets, Invesco Water Resources ETF has $2.13 billion. FIW has an expense ratio of 0.53% and PHO charges 0.60%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Industrials ETFs.
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 Global Water ETF (PIO): ETF Research Reports
Roper Technologies, Inc. (ROP) : Free Stock Analysis Report
Pentair plc (PNR) : Free Stock Analysis Report
First Trust Water ETF (FIW): ETF Research Reports
Invesco Water Resources ETF (PHO): ETF Research Reports
