Understanding the Invesco Food & Beverage ETF (PBJ)

The Invesco Food & Beverage ETF (ticker: PBJ) is designed to provide exposure to companies within the food and beverage industry. This ETF tracks a variety of businesses that make, distribute, and sell food and drinks.

What this ETF is trying to do

PBJ focuses on the food and beverage sector. Instead of picking just one company, it holds many different companies at once. This allows investors to gain exposure to a broad group of businesses, ranging from large soda companies to grocery stores.

Top Holdings

The following are some of the largest companies held by this ETF (note that this is a partial list):

• Corteva Inc (5.95%)

• Archer-Daniels-Midland Co (5.46%)

• The Kroger Co (5.39%)

• Keurig Dr Pepper Inc (5.10%)

• Coca-Cola Co (4.97%)

• Sysco Corp (4.89%)

• Starbucks Corp (4.70%)

• Monster Beverage Corp (4.68%)

What the numbers show

When looking at how this ETF has performed, it is important to distinguish between price return (how much the share price changed) and total return (which includes the value of distributions).

• Year-to-Date (YTD): The price return is approximately 2.26%, while the total return is approximately 3.29%.

• One-Year: The price return was approximately 0.85%, while the total return was approximately 2.14%.

• Three-Year: The price return was approximately 11.67%, while the total return was approximately 16.64%.

The difference between these two numbers shows that the total return is higher because it accounts for the cash paid out to investors.

Income and distribution explanation

PBJ provides regular cash payments, known as distributions. The current distribution yield is approximately 1.28%. This means the amount of cash paid out relative to the ETF's price. These distributions are usually paid on a quarterly basis, with four payments recorded over the last 12 months.

NAV erosion explanation

"NAV erosion" refers to a decline in the Net Asset Value (the actual value of the assets held by the fund). The supplied data is sufficient to evaluate price erosion, but it does not include enough historical NAV-per-share data to confirm or rule out NAV erosion.

However, the fund has an erosion-risk score of 94, which is labeled as "Stable / sideways." The erosion severity is rated as "good," and there is no severe erosion-risk flag present.

Pros

• Diversification: The ETF holds 33 different companies, spreading risk across the food and beverage sector.

• Stable Price Trend: Based on the erosion-risk score, the price movement has been relatively stable.

Cons

• Limited Yield: While it does pay distributions, the 1.28% yield may be considered low depending on an investor's income needs.

Beginner takeaway

The PBJ ETF tracks companies in the food and drink industry. It has shown positive total returns over the last one, three, and five years. While it pays regular quarterly distributions, investors should remember that a distribution yield is not the same as total return. Always look at both the share price movement and the cash payments to see the full picture of how an ETF is performing.