Looking for broad exposure to the Industrials – Water segment of the equity market? You should consider the Invesco Water Resources ETF (PHO), a passively managed exchange traded fund launched on 12/06/2005.
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.
Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Industrials – Water is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 2, placing it in top 13%.
The fund is sponsored by Invesco. It has amassed assets over $1.78 billion, making it one of the larger ETFs attempting to match the performance of the Industrials – Water segment of the equity market. PHO seeks to match the performance of the NASDAQ OMX US Water Index before fees and expenses.
The NASDAQ OMX US Water Index tracks the performance of US exchange-listed companies that create products designed to conserve and purify water for homes, businesses and industries.
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 0.59%, making it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.47%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund’s holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Industrials sector–about 51.90% of the portfolio. Utilities and Healthcare round out the top three.
Looking at individual holdings, Ferguson Plc (FERG) accounts for about 8.93% of total assets, followed by Roper Technologies Inc (ROP) and Danaher Corp (DHR).
The top 10 holdings account for about 56.97% of total assets under management.
Performance and Risk
So far this year, PHO has gained about 3.47%, and is up roughly 5.54% in the last one year (as of 02/23/2023). During this past 52-week period, the fund has traded between $43.41 and $55.50.
The ETF has a beta of 0.96 and standard deviation of 27.28% for the trailing three-year period, making it a medium risk choice in the space. With about 38 holdings, it has more concentrated exposure than peers.
Invesco Water Resources 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, PHO is an outstanding option for investors seeking exposure to the Industrials ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
Invesco S&P Global Water Index ETF (CGW) tracks S&P GLOBAL WATER INDEX and the First Trust Water ETF (FIW) tracks ISE Clean Edge Water Index. Invesco S&P Global Water Index ETF has $977.53 million in assets, First Trust Water ETF has $1.30 billion. CGW has an expense ratio of 0.57% and FIW charges 0.53%.
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 Water Resources ETF (PHO): ETF Research Reports
Danaher Corporation (DHR) : Free Stock Analysis Report
Roper Technologies, Inc. (ROP) : Free Stock Analysis Report
Invesco S&P Global Water Index ETF (CGW): ETF Research Reports
First Trust Water ETF (FIW): ETF Research Reports
Ferguson plc (FERG) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.