Should you invest in the Invesco Leisure and Entertainment ETF (PEJ)?

Launched on 06/23/2005, the Invesco Leisure and Entertainment ETF (PEJ) is a passively managed exchange-traded fund designed to provide broad exposure to the Consumer Discretionary – Leisure and Entertainment segment of the stock market.

Passively managed ETFs are increasingly popular with institutional and retail investors due to their low cost, transparency, flexibility and tax efficiency. These are great vehicles for long-term investors.

Sector ETFs are also convenience funds, offering many ways to get low risk and diversified exposure to a broad group of companies in particular sectors. Consumer Discretionary – Leisure & Entertainment is one of 16 major Zacks industries in the Zacks Industry Ranking. He is currently ranked 13th, putting him in the bottom 19%.

Index Details

The fund is sponsored by Invesco. It has amassed assets of over $301.75 million, making it one of the largest ETFs attempting to match the performance of the Consumer Discretionary – Leisure & Entertainment segment of the stock market. PEJ seeks to match the performance of the Dynamic Leisure & Entertainment Intellidex Index before fees and expenses.

The Dynamic Leisure & Entertainment Intellidex Index is comprised of stocks of U.S. leisure and entertainment companies. The index is designed to provide capital appreciation by carefully evaluating companies based on various investment merit criteria, including fundamental growth, stock valuation, investment suitability and risk factors.

Costs

When considering an ETF's total return, expense ratios are an important factor, and cheaper funds can significantly outperform their more expensive counterparts over the long term if all other factors remain equal.

This ETF's annual operating expenses are 0.58%, putting it on par with most peer products in the industry.

It has a 12-month dividend yield of 0.48%.

Sector exposure and main holdings

ETFs provide diversified exposure and thus minimize the risk associated with an individual stock, but it is still important to look at a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings daily.

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This ETF has the highest allocation to the consumer discretionary sector – approximately 47.60% of the portfolio. Telecommunications and industry complete the top three.

Looking at individual holdings, Royal Caribbean Cruises Ltd (RCL) accounts for approximately 5.43% of total assets, followed by Warner Bros Discovery Inc (WBD) and Airbnb Inc (ABNB).

The top 10 holdings represent approximately 46.60% of total assets under management.

Performance and risk

So far this year, PEJ has added approximately 10.78% and is up approximately 19.42% over the past year (as of 03/28/2024). Over the past 52 weeks, the fund has traded between $34.95 and $46.28.

The ETF has a beta of 1.35 and a standard deviation of 24.03% for the past three-year period, making it a high-risk pick in this space. With around 32 stocks, its exposure is more concentrated than that of its peers.

Alternatives

The Invesco Leisure and Entertainment ETF has a Zacks ETF Rank of 3 (Hold), which is based on, among other factors, the asset class's expected return, expense ratio, and momentum. Thus, PEJ is a reasonable option for those seeking exposure to the consumer discretionary ETF sector. Investors might also want to consider other ETF options in the space.

The Global The Global X Video Games & Esports ETF has $130.86 million in assets, the VanEck Video Gaming and eSports ETF has $257.11 million. HERO has an expense ratio of 0.50% and ESPO charges 0.56%.

Conclusion

To learn more about this and other ETFs, research products that match your investment objectives, and read articles on the latest developments in the ETF investment universe, please visit the Zacks ETF Center.

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Invesco Leisure and Entertainment ETF (PEJ): ETF Research Reports

Royal Caribbean Cruises Ltd. (RCL): Free Inventory Analysis Report

Warner Bros. Discovery, Inc. (WBD): Free Stock Analysis Report

Global X Gaming & Esports ETF (HERO): ETF Research Reports

VanEck Gaming & eSports ETF (ESPO): ETF Research Reports

Airbnb, Inc. (ABNB): Free Stock Analysis Report

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