Market Overview

An ETF With An Enviable December Track Record

An ETF With An Enviable December Track Record

December is one of the best months of the year for U.S. stocks. Keeping with that theme, some corners of the market really enjoy the final month of the year.

With the holiday shopping season in full bloom, investors often look at consumer discretionary and retail stocks and exchange traded funds late in the year.

What Happened

Knowing that consumer discretionary stocks and ETFs can be rewarding in December is just one part of the equation. Investors can use more targeted approaches to the sector for potentially larger gains. That group of ETFs includes the Invesco Dynamic Leisure and Entertainment ETF (NYSE: PEJ).

PEJ's 30 holdings are, as the fund's name implies, comprised primarily of entertainment and leisure firms. The fund's roster runs the gamut of airlines, hotel operators, media companies, restaurant operators and more.

PEJ targets the Dynamic Leisure & Entertainment Intellidex Index, a smart beta benchmark. The index “is designed to provide capital appreciation by thoroughly evaluating companies based on a variety of investment merit criteria, including: price momentum, earnings momentum, quality, management action, and value,” according to Invesco.

Why It's Important

PEJ is over 13 years old and has almost $127 million in assets under management, but often goes overlooked among consumer discretionary ETFs. That shouldn't be the case in December.

“Historical data indicates that one exchange-traded fund in particular tends to shine in the final month of the year: the Invesco Dynamic Leisure and Entertainment ETF (PEJ),” notes Schaeffer's Investment Research.

Over the past 10 Decembers, PEJ has generated positive returns 90 percent of the time with an average gain of 3.49 percent, according to Schaeffer's data.

Top 10 holdings in PEJ include United Continental Holdings Inc. (NYSE: UAL), Yum! Brands Inc. (NYSE: YUM) and Walt Disney Co. (NYSE: DIS).

What's Next

PEJ is coming off a strong November in which the fund gained 3.41 percent, notching its best monthly performance in six months.

“Further, the ETF is set to topple its 10-week moving average for the first time since late September, before the shares pulled back to test the round-number $40 region, which acted as a floor in 2017,” according to Schaeffer's.

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