Invesco Dynamic Food & Beverage ETF (PBJ) offers concentrated exposure to the consumer staples sector. It holds stocks primarily from the packaged foods & meats, food retail, food distributors, and soft drink industries. The ETF is linked to an index that utilizes quantitative analysis and stock screening to identify appropriate stocks.
PBJ uses quant screens based on five factors: price momentum, earnings momentum, quality, management action, and value.
The stock market has witnessed a rough year amid persistently high inflation, the Fed’s aggressive rate hikes, and geopolitical instability. Last week, the Fed raised its benchmark interest rates by 75 basis points for the fourth consecutive time this year, even at the risk of forcing a recession.
Fed Chair Jerome Powell indicated slowing the pace of rate hikes but added that it is “very premature to think about pausing” rate hikes and that the terminal rate would go higher than expected.
Furthermore, according to the latest Bureau of Labor Statistics data, the Consumer Price Index (CPI) rose 7.7% year-over-year through October, slower than economists’ expectations. Despite inflation cooling more than expected in October, consumer prices remained near a multi-decade high, which could affect millions of U.S. households and businesses.
Amid such uncertain market conditions, the consumer staples sector remained a top performer due to its defensive nature since it enjoys an inelastic demand for its products. Thus, the consumer staples ETF, PBJ, can be considered a good hedge against recession.
The fund has gained 8% over the past month and 2.4% year-to-date to close the last trading session at $46.66.
Here are the factors that could influence PBJ’s performance in the near term:
Impressive Fund Stats
PBJ tracks the Dynamic Food & Beverage Intellidex Index. It has assets under management of $346.90 million. Its expense ratio of 0.63% compares to the category average of 0.45%. The fund has net inflows of $7.91 million over the past six months and $252.84 million over the past year. It has a beta of 0.68 and a NAV of $46.70 as of November 10, 2022.
Top Holdings
The fund has a total of 31 holdings. Its principal holdings include Archer-Daniels-Midland Company (ADM) with a 5.39% weighting, followed by General Mills, Inc. (GIS) with a 5.26% weighting, and PepsiCo, Inc. (PEP) and Hershey Company (HSY) with 5.11% and 5.06%, respectively.
Attractive Dividend
PBJ pays an annual dividend of $0.43, which yields 0.93% at the current share price. Its dividend payouts have increased at a 4% CAGR over the past three years. The fund has four consecutive years of dividend payment history.
POWR Ratings Reflect Promising Prospects
PBJ’s strong fundamentals are reflected in its POWR Ratings. The ETF has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
PBJ has a Trade, Peer, and Buy & Hold grade of A. In the 48-ETF Consumer-Focused ETFs group, it is ranked #4.
Click here to see the POWR Ratings for PBJ.
View all the top ETFs in the Consumer-Focused ETFs group here.
Bottom Line
Amid an uncertain economic backdrop, PBJ has outperformed the broader market this year and is expected to do well in the upcoming months.
Given its robust fund statistics and high resilience, this ETF could be a strong buy-and-hold candidate.
How Does Invesco Dynamic Food & Beverage ETF (PBJ) Stack up Against Its Peers?
While PBJ has an overall POWR Rating of A, one might consider looking at its peers with an A (Strong Buy) rating: iShares U.S. Consumer Goods ETF (IYK), Invesco S&P 500 Equal Weight Consumer Staples ETF (RHS), and First Trust Consumer Staples AlphaDEX (FXG).
PBJ shares were trading at $45.62 per share on Friday afternoon, down $1.04 (-2.23%). Year-to-date, PBJ has gained 2.04%, versus a -15.85% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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