A smart beta exchange traded fund, the Invesco Leisure and Entertainment ETF (PEJ) debuted on 06/23/2005, and offers broad exposure to the Consumer Discretionary ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
The fund is sponsored by Invesco. It has amassed assets over $251.08 million, making it one of the average sized ETFs in the Consumer Discretionary ETFs. PEJ, before fees and expenses, seeks to match the performance of the Dynamic Leisure & Entertainment Intellidex Index.
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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain the same.
Annual operating expenses for PEJ are 0.57%, which makes it on par with most peer products in the space.
It has a 12-month trailing dividend yield of 0.40%.
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.
Representing 53.9% of the portfolio, the fund has heaviest allocation to the Consumer Discretionary sector; Telecom and Industrials round out the top three.
Looking at individual holdings, Expedia Group Inc (EXPE) accounts for about 6% of total assets, followed by Airbnb Inc (ABNB) and Las Vegas Sands Corp (LVS).
Its top 10 holdings account for approximately 46.37% of PEJ's total assets under management.
Performance and Risk
Year-to-date, the Invesco Leisure and Entertainment ETF has added roughly 0.07% so far, and was up about 33.63% over the last 12 months (as of 04/14/2026). PEJ has traded between $45.49 $62.19 in this past 52-week period.
The ETF has a beta of 1.12 and standard deviation of 20.42% for the trailing three-year period, making it a high risk choice in the space. With about 32 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 $81.66 million in assets, VanEck Video Gaming and eSports ETF has $262.99 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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Invesco Leisure and Entertainment ETF (PEJ): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).