Is Invesco Leisure and Entertainment ETF (PEJ) a Strong ETF Right Now?

Launched on 06/23/2005, the Invesco Leisure and Entertainment ETF (PEJ) is a smart beta exchange traded fund offering broad exposure to the Consumer Discretionary ETFs category of the 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.

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.

However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: 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.

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

PEJ is managed by Invesco, and this fund has amassed over $360.77 million, which makes it one of the larger ETFs in the Consumer Discretionary ETFs. This particular fund seeks to match the performance of the Dynamic Leisure & Entertainment Intellidex Index before fees and expenses.

The Dynamic Leisure & Entertainment Intellidex Index is comprised of stocks of U.S. leisure and entertainment companies. The Index is designed to provide capital appreciation by thoroughly evaluating companies based on a variety of investment merit criteria, including fundamental growth, stock valuation, investment timeliness and risk factors.

Cost & Other Expenses

Expense 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.

Annual operating expenses for this ETF are 0.57%, making it on par with most peer products in the space.

The fund has a 12-month trailing dividend yield of 0.49%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

For PEJ, it has heaviest allocation in the Consumer Discretionary sector --about 62.1% of the portfolio --while Telecom and Consumer Staples round out the top three.

Taking into account individual holdings, Expedia Group Inc (EXPE) accounts for about 5.56% of the fund's total assets, followed by Viking Holdings Ltd (VIK) and Sysco Corp (SYY).

Its top 10 holdings account for approximately 43.22% of PEJ's total assets under management.

Performance and Risk

So far this year, PEJ has added roughly 11.33%, and was up about 16.77% in the last one year (as of 08/20/2026). During this past 52-week period, the fund has traded between $55.74 and $69.03.

PEJ has a beta of 1.07 and standard deviation of 20.66% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 33 holdings, it has more concentrated exposure than peers .

Alternatives

Invesco Leisure and Entertainment ETF is not a suitable option for investors seeking to outperform the Consumer Discretionary ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.

Global X Video Games & Esports ETF (HERO) tracks SOLACTIVE VIDEO GAMES & ESPORTS INDEX and the VanEck Video Gaming and eSports ETF (ESPO) tracks MVIS GLOBAL VIDEO GAMING AND ESPORTS IND. Global X Video Games & Esports ETF has $68.2 million in assets, VanEck Video Gaming and eSports ETF has $256.33 million. HERO has an expense ratio of 0.50% and ESPO changes 0.55%.

Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the Consumer Discretionary ETFs

Bottom Line

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This article originally published on Zacks Investment Research (zacks.com).

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