The Invesco Exchange Fund No Load Has Reached The Summit

| About: Invesco Exchange (ACEHX)

Summary

The Invesco Exchange Fund No Load is the top-performing fund in the Large Blend Category with a YTD Return of 12.03%.

The fund's performance has been boosted by its portfolio weight advantages in the energy and basic materials sectors. Additionally, the fund has been given a boost by the poor-performing health-care.

The fund' has a very affordable expense ratio in comparison to its benchmarks.

The Invesco Exchange Fund No Load (MUTF:ACEHX) is the #1 rated fund in the Large Blend Category. The fund has an YTD Return of 12.03%.

This is compared to the S&P 500's YTD Return of 4.52% as well as the Large Blend Category average's YTD Return of 3.13%. Also, this is a significant turnaround from the fund's performances in recent years.

Other than a minor outperformance of the Large Blend Category in 2011, the fund has been outpaced by their benchmarks in every other year annually.

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In the fund's market capitalization statistics, the fund has a significant advantage of over 10% in terms of mid-cap stock weightings. Additionally, the fund has portfolio weight deficits in the giant-cap portfolio weighting vs. its benchmarks. The fund's market capitalization statistics can be seen below.

Size

% of Portfolio

Benchmark

Category Avg.

Giant

43.36

44.88

67.65

Large

22.06

33.07

12.04

Medium

32.82

19.78

17.36

Small

0.79

2.22

2.82

Micro

0.97

0.05

0.13

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The fund's sector weightings provide a greater clue to the fund's outperformance so far this year. As you will see in the chart below, the fund has a portfolio weight advantage of over 20% in the basic materials sector vs its benchmark and the Large Blend Category.

Additionally, the Invesco Exchange Fund No Load's concentration in the energy sector is 15% higher than its benchmark and the Large Blend category average.

The basic materials and energy sectors have been largely successful for the most part. In terms of U.S Sector performance, the Energy Select Sector SPDR ETF (NYSEARCA:XLE) is the second-best performing U.S Sector ETF with a 16.0% YTD Return.

The Materials Select Sector SPDR ETF (NYSEARCA:XLB) ranks third in U.S Sector ETF performance with an 11.8% YTD Return. Thus, the fund benefits from overexposure to these solid-performing sectors.

Sector

ACEHX Stock %

Benchmark

Category Avg.

Basic Materials

24.70

3.05

3.10

Energy

23.11

6.84

6.55

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The Basic Materials and Energy sectors combine to make up nearly 50% of the fund's weight in holdings. As seen in the charts below, the fund's basic materials and energy sector holdings have boosted the fund's performance so far this year.

One of the four basic materials holdings in the fund has a negative YTD Return. Out of the fund's eight energy holdings, only one have a negative YTD Return. As you can see in the charts, the negative holdings in each sector had minimal impact on the fund. The rest of the holdings have performed well.

BASIC MATERIALS SECTOR HOLDING

PORTFOLIO WEIGHT

YTD RETURN

Air Products & Chemicals Inc. (NYSE:APD)

11.45%

12.89

International Flavors & Fragrances Inc. (NYSE:IFF)

9.92%

7.28

Weyerhaeuser Co (NYSE:WY)

2.23%

0.53

Louisiana-Pacific Corp (NYSE:LPX)

0.78%

-2.83

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ENERGY SECTOR HOLDING

PORTFOLIO WEIGHT

YTD RETURN

Exxon Mobil Corp (NYSE:XOM)

5.11%

19.67

Hess Corp (NYSE:HES)

4.47%

24.32

Schlumberger Ltd (NYSE:SLB)

4.16%

15.54

Halliburton Co (NYSE:HAL)

3.80%

35.72

Apache Corp (NYSE:APA)

2.25%

31.91

BP PLC (NYSE:BP)

1.79%

14.62

Baker Hughes Inc. (NYSE:BHI)

1.18%

2.95

Transocean Ltd (NYSE:RIG)

0.03%

-2.83

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The fund also have boosted by a strong performance from the fund's health-care sector holdings. The Health Care Select Sect SPDR ETF (NYSEARCA:XLV) has an anemic YTD return of -0.1%. Thus, it would not seem like a good idea on paper for the Invesco Exchange Fund No Load to hold a slight portfolio weight advantage in health-care sector holdings over its benchmarks.

However, 5 out of the fund's 7 health-care sector holdings have a positive YTD Return. This can be seen below.

HEALTH CARE SECTOR HOLDING

PORTFOLIO WEIGHT

YTD RETURN

Johnson & Johnson (NYSE:JNJ)

5.15%

15.78

Merck & Co Inc. (NYSE:MRK)

4.60%

10.94

Pfizer Inc. (NYSE:PFE)

4.01%

9.01

Express Scripts Holding Co (NASDAQ:ESRX)

1.19%

-11.97

Baxter International Inc. (NYSE:BAX)

0.72%

21.11

Baxalta Inc.

0.71%

18.09

Cardinal Health Inc. (NYSE:CAH)

0.27%

-12.06

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Finally, the fund benefits from having minimal exposure to the poor-performing financial services sector. The Financial Select Sector SPDR ETF is the worst-performing U.S Sector ETF with a -1.0% YTD Return. As you can see below, the fund has a very favorable deficit in this poor-performing sector.

Sector

ACEHX Stock %

Benchmark

Category Avg.

Financial Services

0.84%

14.37%

15.16%

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In addition to favorable sector weightings, the fund has the benefit of affordability on its side. Right now, the fund's expense ratio is 0.54% as of its latest prospectus. As you can see on the graph, this fund has maintained a competitive advantage in terms of affordability vs. its benchmarks.

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CONCLUSION

This fund is definitely worth the investment for potential investors. The fund has favorable weightings in the energy and basic materials sectors. These favorable weightings have been a major catalyst to this fund's performance so far this year.

Additionally, the fund has benefited from an above-average performance from the poor-performing health-care sector. In addition, the fund benefits from having little to no exposure to the poor-performing financial services sector.

The fund's advantage in terms of affordability is icing on the cake.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.