Is Invesco Water Resources ETF (PHO) a Strong ETF Right Now?

Making its debut on 12/06/2005, smart beta exchange traded fund Invesco Water Resources ETF (PHO) provides investors broad exposure to the Industrials ETFs category of the market.What Are Smart Beta ETFs?For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.On the other hand, some investors who believe that it is possible to beat the market by superior stock selection opt to invest in another class of funds that track non-cap weighted strategies--popularly known as smart beta.This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.Fund Sponsor & IndexPHO is managed by Invesco, and this fund has amassed over $2.02 billion, which makes it one of the larger ETFs in the Industrials ETFs. PHO seeks to match the performance of the NASDAQ OMX US Water Index before fees and expenses.The NASDAQ OMX US Water Index tracks the performance of US exchange-listed companies that create products designed to conserve and purify water for homes, businesses and industries.Cost & Other ExpensesExpense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.Operating expenses on an annual basis are 0.59% for this ETF, which makes it on par with most peer products in the space.PHO's 12-month trailing dividend yield is 0.57%.Sector Exposure and Top HoldingsWhile ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.Representing 55.1% of the portfolio, the fund has heaviest allocation to the Industrials sector; Information Technology and Utilities round out the top three.Looking at individual holdings, Roper Technologies Inc (ROP) accounts for about 8.54% of total assets, followed by Waters Corp (WAT) and Ferguson Enterprises Inc (FERG).The top 10 holdings account for about 59.45% of total assets under management.Performance and RiskThe ETF has lost about -4.01% and is down about -2.36% so far this year and in the past one year (as of 06/10/2026), respectively. PHO has traded between $64.15 and $74.61 during this last 52-week period. The ETF has a beta of 0.97 and standard deviation of 15.97% for the trailing three-year period, making it a medium risk choice in the space. With about 39 holdings, it has more concentrated exposure than peers .AlternativesInvesco Water Resources ETF is a reasonable option for investors seeking to outperform the Industrials ETFs segment of the market. However, there are other ETFs in the space which investors could consider.Invesco S&P Global Water Index ETF (CGW) tracks S&P GLOBAL WATER INDEX and the First Trust Water ETF (FIW) tracks ISE Clean Edge Water Index. Invesco S&P Global Water Index ETF has $999.34 million in assets, First Trust Water ETF has $1.8 billion. CGW has an expense ratio of 0.58% and FIW changes 0.50%.Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Industrials ETFsBottom LineTo 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.Boost Your Portfolio with Our Top ETF InsightsZacks' exclusive Fund Newsletter delivers actionable information, top news and analysis, as well as top-performing ETFs, straight to your inbox every week.Don’t miss out on this valuable resource. It’s free!Get it now >>This article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks