Kicking Back and Profiting from Leisure and Entertainment

(Note: second in a series on post-pandemic boom ETFs)

There are many possible investment strategies to use within a single market segment, including leisure and entertainment.

This exchange-traded fund (ETF), Invesco Dynamic Leisure and Entertainment ETF (PEJ), focuses on leisure and entertainment with a different strategy. Many funds tend to be composed of the largest companies in the industry that they track, leaving out lower market-cap stocks.

However, this fund is different. It holds entertainment stocks based on a combination of factors, including growth, valuation and timing. In practice, this has meant that it is not heavily weighted on the largest companies, but rather on other factors.

There are usually about 30 holdings in PEJ. Currently, its holdings are more weighted toward smaller public companies, compared to other ETFs.

PEJ currently has $318 million in assets under management, making it a relatively small ETF. Its expense ratio of 0.63% is a bit pricey, but it offers a current dividend yield of 0.56%. As this industry has not fully recovered from the COVID-19 crash and shutdowns earlier this year, it is no surprise that PEJ is substantially down by 25.58% so far this year. However, it is up 11.39% in the last month, so hope exists.

Chart courtesy of StockCharts.com

In terms of leisure and entertainment subindustries, the largest allocation is to restaurants and bars. Other strongly featured themes in this ETF include broadcasting, leisure & recreation and entertainment production.

PEJ has nearly half of its assets in its top 10 holdings. These include Chipotle Mexican Grill, Inc. (CMG), 5.90%; ViacomCBS Inc. (VIAC), 5.89%; Yum China Holdings, Inc. (YUMC), 5.83%; The Walt Disney Company (DIS), 5.06%; and Hilton Worldwide Holdings, Inc. (HLT), 5.02%.

For investors who are looking to invest in a differently determined basket of leisure and entertainment stocks, the smaller and growing companies represented in Invesco Dynamic Leisure and Entertainment ETF (PEJ) may provide an interesting investment thesis, along with potential profits.

Remember, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an email. You just may see your question answered in a future ETF Talk.

Jim Woods

Jim Woods is a 20-plus-year veteran of the markets with varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor. Jim is the editor of Intelligence Report, Investing Edge, the Bullseye Stock Trader, and The Deep Woods (formerly the Weekly ETF Report). His books include co-authoring, “Billion Dollar Green: Profit from the Eco Revolution,” and “The Wealth Shield: How to Invest and Protect Your Money from Another Stock Market Crash, Financial Crisis or Global Economic Collapse.” He’s also ghostwritten many books and articles, as well as edited content for some of the investment industry’s biggest luminaries. His articles have appeared on many leading financial websites, including StockInvestor.com, InvestorPlace.com, Main Street Investor, MarketWatch, Street Authority, Human Events and many others. Jim formerly worked with Investor’s Business Daily founder William J. O’Neil, helping to author training courses in the CANSLIM stock-picking methodology. The independent firm TipRanks rates Jim the No. 3 financial blogger in the world (out of more than 6,000). TipRanks calculates that, since 2012, he's made 361 successful recommendations out of 499 total, earning a success rate of 72% and a +15.3% average return per recommendation. He is known in professional and personal circles as “The Renaissance Man,” because his expertise includes such varied fields as composing and performing music; Western horsemanship, combat marksmanship, martial arts, auto racing and bodybuilding. Jim holds a BA in philosophy from the University of California, Los Angeles, and is a former U.S. Army paratrooper. A self-described “radical for capitalism,” he celebrates the virtue of making money from his Southern California horse ranch.