Income ETF PCEF Sees Index Rebalancing — What Changed?

With the changing of the calendar also comes myriad index rebalances for many popular funds and fund categories. The popular income ETF category offers current income to investors, from newbies to those on the cusp of retirement. The closed end fund-focused income ETF PCEF is one of those funds to rebalance, making some key moves in its underlying index, CEFX.

See the Rebalance Changes in Income ETF PCEF

The Invesco CEF Income Composite ETF (PCEF) charges 271 basis points (bps) fee for its services. CEFX, the SNET Composite Closed-End Fund Index, provides an intriguing spin on the income ETF model by investing in closed-end funds. That has helped the fund return 12.3% over one year and 12.8% over three years, beating its ETF Database Category averages in those time frames. The strategy’s most recent pay date produced a $0.13017 per share distribution, as well.

What changed after the closed end fund-focused income ETF rebalanced, then? The top five holdings by weight remain the same. Two Eaton Vance funds and two Nuveen funds continue to sit in the top five holdings, with one from BlackRock. 

The Eaton Vance Tax-Managed Global Diversified Equity Income Fund (EXG), the top holding, saw its weight drop from 4.4 to 4.2 basis points (bps). The Nuveen Preferred & Income Opportunities Fund of Benefit Interest (JPC) grew in weight from 2.7 to 2.9 bps in the fund’s portfolio. It takes the second-highest weight in the fund. Intriguingly, the BlackRock Science and Technology Term Trust (BSTZ) dropped to fourth place by weight at 2.5 bps. It now sits below a different Nuveen fund.

CEFX dropped one closed-end fund from its holdings and added a new one to replace it. The index dropped the Barings Participation Investors Fund (MPV) and added the Guggenheim Strategic Opportunities Fund (GOF). GOF comes in at a 2 bps weight in the fund. 

Tracking CEFX, PCEF may continue to provide an efficient route into a traditionally more complex space in closed-end funds. For those looking to add income to their portfolios with an intriguing income ETF, PCEF may appeal.

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VettaFi LLC (“VettaFi”) is the index provider for PCEF, for which it receives an index licensing fee. However, PCEF is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of PCEF.