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Amid geopolitical tensions, investors have been scampering out of high beta, cyclical sectors to low volatility, defensive destinations. Those moves are benefiting real estate and utilities exchange traded funds, but consumer staples ETFs should not be ignored.
Just a few dozen U.S.-listed ETFs hit record highs on Tuesday. One of those funds was the Invesco Dynamic Food & Beverage ETF (NYSE:PBJ), a more exotic interpretation of the standard consumer staples ETF.
PBJ, which has been around more than 14 years, is now higher by 17% year to date, which is mostly inline with standard staples ETFs.
As its name implies, PBJ is a food and beverage ETF, so it's not getting the benefit of exposure to Procter & Gamble (NYSE:PG) and other sturdy consumer products names. Still, PBJ has a way of making things work for investors and that is largest tied to the methodology behind the Dynamic Food & Beverage Intellidex Index, PBJ's underlying benchmark.
That 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.
Importantly, PBJ is not a dedicated consumer staples ETF. While that sector represents 80.66% of its weight, the fund has just enough exposure to consumer discretionary names (19.34%) to make things interesting. When the likes of Starbucks (NASDAQ:SBUX) and Chipotle Mexican Grill (NYSE:CMG), which combine for almost 9% of PBJ's weight, are soaring, this fund gets very interesting.
For investors looking to play some offensive with defensive or those looking to add some adventure to low volatility holdings, PBJ is an ETF that makes sense. Plus, the Invesco fund is a credible way for investors to wade into growth stocks as about a third of the fund's holdings are classified as growth fare compared to less than 26% with the value designation.
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