Is Invesco Zacks Multi-Asset Income ETF (CVY) a Hot ETF Right Now?

A smart beta exchange traded fund, the Invesco Zacks Multi-Asset Income ETF (CVY) debuted on 09/21/2006, and offers broad exposure to the Total Market (U.S.) ETFs category of the U.S. equity market.

What Are Smart Beta ETFs?

Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.

Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.

If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.

Non-cap weighted indexes try to choose stocks that have a better chance of risk-return performance, which is based on specific fundamental characteristics, or a mix of other such characteristics.

While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.

Fund Sponsor & Index

CVY is managed by Invesco, and this fund has amassed over $287.33 M, which makes it one of the larger ETFs in the Total Market (U.S.) ETFs. Before fees and expenses, this particular fund seeks to match the performance of the Zacks Multi-Asset Income Index.

The Zacks Multi-Asset Income Index is comprised of approximately 125 to 150 stocks selected, based on a multi-factor proprietary model, from a universe of domestic and international companies, including U.S.-listed common stocks, ADRs paying dividends, REITs, MLPs, closed-end funds and traditional preferred stocks.

Cost & Other Expenses

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.

Operating expenses on an annual basis are 0.79% for this ETF, which makes it on par with most peer products in the space.

The fund has a 12-month trailing dividend yield of 3.93%.

Sector Exposure and Top Holdings

ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

When you look at individual holdings, Darden Restaurants Inc (DRI) accounts for about 1.25% of the fund's total assets, followed by Citigroup Inc (C) and Gilead Sciences Inc (GILD).

The top 10 holdings account for about 11.12% of total assets under management.

Performance and Risk

CVY has gained about 1.68% so far this year, and as of 07/10/2018, was up about 11.09% in the last one year. In the past 52-week period, the fund has traded between $20.64 and $23.39.

The ETF has a beta of 0.86 and standard deviation of 12.67% for the trailing three-year period. With about 149 holdings, it effectively diversifies company-specific risk.

Bottom Line

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.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
GUGG-MULTI-ASST (CVY): ETF Research Reports
 
Citigroup Inc. (C) : Free Stock Analysis Report
 
Gilead Sciences, Inc. (GILD) : Free Stock Analysis Report
 
Darden Restaurants, Inc. (DRI) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research