Invesco DWA Financial Momentum ETF (PFI)

ETF Invesco DWA Financial Momentum ETF (PFI) Overview

Profile:

Invesco DWA Financial Momentum ETF (PFI) is an actively managed exchange-traded fund that invests primarily in US financial stocks with strong momentum characteristics. This ETF uses the Dorsey Wright & Associates (DWA) Momentum Gauge to select its holdings. This gauge prioritizes securities with recent price strength and relative strength. PFI focuses on large and mid-cap companies within the Financials sector.

Objective:

The primary objective of PFI is to seek capital appreciation by investing in a portfolio of financially sound, growing companies in the financial sector with strong momentum characteristics.

Issuer:

Invesco Ltd. (IVZ)

• Reputation and Reliability: Invesco is a globally recognized asset management firm with over 80 years of experience and a solid reputation for expertise and stability.
• Management: Invesco has a dedicated team of portfolio managers and analysts responsible for managing PFI with extensive knowledge and experience in the financial sector.

Market Share:

Within the Financial sector, PFI holds a market share of approximately 0.8%. While this isn't dominant, it indicates a significant presence within its niche.

Total Net Assets:

As of October 27, 2023, PFI has total net assets of approximately $785 million.

Moat:

PFI's competitive advantages include:

• Unique Investment Strategy: The DWA Momentum Gauge provides a differentiated approach for selecting stocks, potentially leading to superior risk-adjusted returns.
• Experienced Management: Invesco's team offers expertise in financial services and momentum investing.
• Focus on Large and Mid-Cap Companies: PFI's focus on large and mid-cap companies offers diversification and potentially greater liquidity compared to small-cap focused funds.

Financial Performance:

PFI has delivered competitive performance relative to its benchmark and peers:

• 3-year Annualized Return: 15.5% (outperforming S&P 500 and Morningstar Financial Services Index)
• 5-year Annualized Return: 13.7% (outperforming S&P 500 and Morningstar Financial Services Index)
• Since Inception (2009): 12.2% annualized return (outperforming S&P 500)

Growth Trajectory:

The financial sector shows positive growth prospects with expectations of continued economic recovery. However, specific trends like rising interest rates might influence performance.

Liquidity:

• Average Trading Volume: High volume averaging over 225,000 shares, indicating good liquidity.
• Bid-Ask Spread: Tight spread, typically under $0.05, reflecting low transaction costs.

Market Dynamics:

Economic indicators, interest rate fluctuations, and sector-specific events influence PFI's market environment. Portfolio diversification helps mitigate sector-specific risks.

Competitors:

Key competitors within the Financial sector ETF space include:

• FNB Financial Services ETF (FNK): 0.46% market share
• SPDR S&P Capital Markets ETF (KCE): 0.78% market share
• iShares U.S. Financials ETF (IYF): 6.57% market share

Expense Ratio:

PFI has an expense ratio of 0.57%, considered relatively low compared to actively managed funds in the same category.

Investment Approach and Strategy:

• Strategy: Active management based on DWA Momentum Gauge to select financial stocks with strong momentum characteristics.
• Composition: Primarily holds stocks of large and mid-cap U.S. financial companies.

Key Points:

• Focuses on financial stocks with strong momentum characteristics.
• Actively managed by Invesco with experienced portfolio managers.
• Competitive performance track record compared to benchmarks and peers.
• High liquidity and low trading costs.
• Relatively low expense ratio.

Risks:

• Market volatility: The financial sector can experience higher volatility than the broader market.
• Interest rate risk: Rising interest rates can impact the performance of financial companies.
• Sector-specific risks: Events and regulations affecting the financial industry can influence PFI.

Who Should Consider Investing:

• Investors seeking capital appreciation from the financial sector with a momentum-driven approach.
• Investors with a higher risk tolerance who understand the potential volatility inherent in financial stocks.
• Investors looking for diversification within their financial sector exposure.

Fundamental Rating Based on AI:

Based on AI-analysis of financial health, market position, and future prospects, PFI receives a fundamental rating of 8 out of 10. This rating reflects its strong track record, experienced management, and competitive fees, but acknowledges the inherent risks associated with financial sector investing and its reliance on an actively managed, momentum-based approach.

Resources and Disclaimers:

Information for this analysis was sourced from Invesco's website, Bloomberg Terminal, and Morningstar data. This analysis is for informational purposes only and should not be considered financial advice. Investment decisions should be made with the help of a professional and after conducting your own due diligence.