Designed to provide broad exposure to the Large Cap Value segment of the US equity market, the Invesco Dividend Achievers ETF PFM is a passively managed exchange traded fund launched on 09/15/2005.

The fund is sponsored by Invesco. It has amassed assets over $697.06 million, making it one of the average sized ETFs attempting to match the Large Cap Value segment of the US equity market.

Why Large Cap Value

Large cap companies usually have a market capitalization above $10 billion. Overall, they are usually a stable option, with less risk and more sure-fire cash flows than mid and small cap companies.

Value stocks have lower than average price-to-earnings and price-to-book ratios. They also have lower than average sales and earnings growth rates. While value stocks have outperformed growth stocks in nearly all markets when you consider long-term performance, growth stocks are more likely to outpace value stocks in strong bull markets.

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 0.53%, making it one of the more expensive products in the space.

It has a 12-month trailing dividend yield of 1.65%.

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 to the Information Technology sector–about 21.40% of the portfolio. Financials and Healthcare round out the top three.

Looking at individual holdings, Apple Inc accounts for about 4.31% of total assets, followed by Microsoft Corp and Broadcom Inc.

The top 10 holdings account for about 26.99% of total assets under management.

Performance and Risk

PFM seeks to match the performance of the NASDAQ US Broad Dividend Achievers Index before fees and expenses. The NASDAQ US Broad Dividend Achievers Index is designed to identify a diversified group of dividend-paying companies which have increased their annual dividend for 10 or more consecutive fiscal years.

The ETF has gained about 16.28% so far this year and it’s up approximately 23.33% in the last one year (as of 09/16/2024). In the past 52-week period, it has traded between $35.25 and $46.01.

The ETF has a beta of 0.83 and standard deviation of 13.92% for the trailing three-year period, making it a medium risk choice in the space. With about 426 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco Dividend Achievers 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, PFM is a great option for investors seeking exposure to the Style Box – Large Cap Value segment of the market. There are other additional ETFs in the space that investors could consider as well.

The Schwab U.S. Dividend Equity ETF SCHD and the Vanguard Value ETF VTV track a similar index. While Schwab U.S. Dividend Equity ETF has $60.01 billion in assets, Vanguard Value ETF has $125.50 billion. SCHD has an expense ratio of 0.06% and VTV charges 0.04%.

Bottom-Line

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.

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