This is a core-oriented ETF that tracks the Bloomberg Pricing Power Index and invests in US large- and mid-cap companies whose gross margins have fluctuated little over the past several years. It selects stocks with strong pricing power, focusing on the ability to defend margins when costs are rising.

It suits long-term investors who want to diversify across high-quality companies that maintain stable profitability even in inflationary and rising-cost environments.

It is a passive (index-tracking) ETF managed by Invesco.

Following the index rules, the fund selects and holds stocks whose gross margins have varied little over the past several years, in other words, companies with stable pricing power. By concentrating on high-quality stocks that maintain margins regardless of economic cycles and price swings, it provides exposure to business models that can pass costs on to customers.

• Rule-based stock selection based on gross margin stability
• A relatively concentrated portfolio focused on the pricing power theme

Assets under management (AUM) stand at $169.3M, and the expense ratio is 0.40% per year.

Compared with broad core ETFs, its selection criteria are more distinct, so exposure is concentrated in a single factor: margin stability.

Because it is built around high-quality stocks with strong pricing power, it tends to follow a trend similar to that of US large caps overall in the long run. Short-term performance is affected by interest rates, the inflation environment, and margin-related earnings seasons.

Fund flows vary with interest in the margin-defense theme, and when inflation concerns come to the fore, demand for stocks able to pass on prices can stand out by comparison.

Its strength is a clear selection criterion of margin stability, while its weaknesses are single-factor concentration and a somewhat higher fee than the category average.

VIG, SCHD, and VYM shown in the table are comparison targets focused on dividend growth and high dividends. They overlap in offering exposure to quality stocks, but their selection criteria are geared toward dividends. Meanwhile, QUAL is a quality-themed option that, much like gross margin stability, selects stocks with strong profitability, and VOO can also be considered as a broad, low-cost core holding.

These are the points to review before investing in POWA. Checking in advance the nature of the pricing power theme, the fee level, the degree of single-factor concentration, and the currency exposure can help you judge whether it fits your investment objectives.

Because it is concentrated in the single factor of margin stability, it may lag broad indexes when that theme loses its market leadership. A tilt toward large caps and exchange rate movements are also sources of short-term volatility.

It suits long-term investors who want to diversify, through a thematic approach, across high-quality companies able to pass costs on. If you want a dividend focus, VIG and SCHD can be alternatives, and if you prefer a low-cost broad core holding, VOO can serve that role.