Should You Invest in the Invesco S&P SmallCap Information Technology ETF (PSCT)?

The Invesco S&P SmallCap Information Technology ETF (PSCT) was launched on 04/07/2010, and is a passively managed exchange traded fund designed to offer broad exposure to the Technology – Broad segment of the equity market.

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

Sector ETFs are also funds of convenience, offering many ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Technology – Broad is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 5, placing it in top 31%.

Index Details

The fund is sponsored by Invesco. It has amassed assets over $315.59 million, making it one of the average sized ETFs attempting to match the performance of the Technology – Broad segment of the equity market. PSCT seeks to match the performance of the S&P SmallCap 600 Capped Information Technology Index before fees and expenses.

The S&P SmallCap 600 Capped Information Technology Index measures the overall performance of common stocks of US information technology companies.

Costs

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 this ETF are 0.29%, making it one of the least expensive products in the space.

Sector Exposure and Top Holdings

ETFs offer a diversified exposure and thus minimize single stock risk but it is still important to delve into a fund’s holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.

This ETF has heaviest allocation in the Information Technology sector–about 98.90% of the portfolio.

Looking at individual holdings, Exlservice Holdings Inc (EXLS) accounts for about 4.63% of total assets, followed by Rogers Corp (ROG) and Sps Commerce Inc (SPSC).

The top 10 holdings account for about 32.25% of total assets under management.

Performance and Risk

The ETF has lost about -18.10% so far this year and is down about -15.85% in the last one year (as of 11/16/2022). In that past 52-week period, it has traded between $109.76 and $156.65.

The ETF has a beta of 1.18 and standard deviation of 32.44% for the trailing three-year period, making it a high risk choice in the space. With about 71 holdings, it effectively diversifies company-specific risk.

Alternatives

Invesco S&P SmallCap Information Technology ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, PSCT is a great option for investors seeking exposure to the Technology ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.

Technology Select Sector SPDR ETF (XLK) tracks Technology Select Sector Index and the Vanguard Information Technology ETF (VGT) tracks MSCI US Investable Market Information Technology 25/50 Index. Technology Select Sector SPDR ETF has $40.30 billion in assets, Vanguard Information Technology ETF has $41.76 billion. XLK has an expense ratio of 0.10% and VGT charges 0.10%.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.

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Invesco S&P SmallCap Information Technology ETF (PSCT): ETF Research Reports

Rogers Corporation (ROG): Free Stock Analysis Report

ExlService Holdings, Inc. (EXLS): Free Stock Analysis Report

SPS Commerce, Inc. (SPSC): Free Stock Analysis Report

Technology Select Sector SPDR ETF (XLK): ETF Research Reports

Vanguard Information Technology ETF (VGT): ETF Research Reports

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