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Is Invesco Fundamental High Yield Corporate Bond ETF (PHB) a Strong ETF Right Now?
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A smart beta exchange traded fund, the Invesco Fundamental High Yield Corporate Bond ETF (PHB - Free Report) debuted on 11/15/2007, and offers broad exposure to the High-Yield/Junk Bond ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
Managed by Invesco, PHB has amassed assets over $803.16 million, making it one of the larger ETFs in the High-Yield/Junk Bond ETFs. Before fees and expenses, PHB seeks to match the performance of the RAFI Bonds US High Yield 1-10 Index.
The RAFI Bonds US High Yield 1-10 Index is comprised of US dollar-denominated bonds that are registered with the SEC or that are Rule 144A securities that provide for registration rights and whose issuers are public companies listed on a major US stock exchange.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.50% for PHB, making it on par with most peer products in the space.
PHB's 12-month trailing dividend yield is 3.49%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Taking into account individual holdings, United Airlines Holdings Inc-4.25%-10-1-2022 (910047AJ8) accounts for about 1.72% of the fund's total assets, followed by Ford Motor Co-4.35%-12-8-2026 (345370CR9) and Ford Motor Co-8.50%-4-21-2023 (345370CV0).
PHB's top 10 holdings account for about 13.82% of its total assets under management.
Performance and Risk
So far this year, PHB has lost about -9.01%, and is down about -6.71% in the last one year (as of 05/16/2022). During this past 52-week period, the fund has traded between $17.41 and $19.67.
PHB has a beta of 0.38 and standard deviation of 9.25% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 183 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco Fundamental High Yield Corporate Bond ETF is not a suitable option for investors seeking to outperform the High-Yield/Junk Bond ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
IShares Broad USD High Yield Corporate Bond ETF (USHY - Free Report) tracks BofA Merrill Lynch U.S. High Yield Constrained Index and the iShares iBoxx High Yield Corporate Bond ETF (HYG - Free Report) tracks Markit iBoxx USD Liquid High Yield Index. IShares Broad USD High Yield Corporate Bond ETF has $6.42 billion in assets, iShares iBoxx High Yield Corporate Bond ETF has $14.24 billion. USHY has an expense ratio of 0.15% and HYG charges 0.48%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the High-Yield/Junk Bond ETFs.
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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Is Invesco Fundamental High Yield Corporate Bond ETF (PHB) a Strong ETF Right Now?
A smart beta exchange traded fund, the Invesco Fundamental High Yield Corporate Bond ETF (PHB - Free Report) debuted on 11/15/2007, and offers broad exposure to the High-Yield/Junk Bond ETFs category of the market.
What Are Smart Beta ETFs?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide a low-cost, convenient and transparent way of replicating market returns.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
This kind of index follows this same mindset, as it attempts to pick stocks that have better chances of risk-return performance; non-cap weighted strategies base selection on certain fundamental characteristics, or a mix of such characteristics.
Even though this space provides many choices to investors--think one of the simplest methodologies like equal-weighting and more complicated ones like fundamental and volatility/momentum based weighting--not all have been able to deliver first-rate results.
Fund Sponsor & Index
Managed by Invesco, PHB has amassed assets over $803.16 million, making it one of the larger ETFs in the High-Yield/Junk Bond ETFs. Before fees and expenses, PHB seeks to match the performance of the RAFI Bonds US High Yield 1-10 Index.
The RAFI Bonds US High Yield 1-10 Index is comprised of US dollar-denominated bonds that are registered with the SEC or that are Rule 144A securities that provide for registration rights and whose issuers are public companies listed on a major US stock exchange.
Cost & Other Expenses
For ETF investors, expense ratios are an important factor when considering a fund's return; in the long-term, cheaper funds actually have the ability to outperform their more expensive cousins if all other things remain the same.
Operating expenses on an annual basis are 0.50% for PHB, making it on par with most peer products in the space.
PHB's 12-month trailing dividend yield is 3.49%.
Sector Exposure and Top Holdings
While ETFs offer diversified exposure, which minimizes single stock risk, a deep look into a fund's holdings is a valuable exercise. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
Taking into account individual holdings, United Airlines Holdings Inc-4.25%-10-1-2022 (910047AJ8) accounts for about 1.72% of the fund's total assets, followed by Ford Motor Co-4.35%-12-8-2026 (345370CR9) and Ford Motor Co-8.50%-4-21-2023 (345370CV0).
PHB's top 10 holdings account for about 13.82% of its total assets under management.
Performance and Risk
So far this year, PHB has lost about -9.01%, and is down about -6.71% in the last one year (as of 05/16/2022). During this past 52-week period, the fund has traded between $17.41 and $19.67.
PHB has a beta of 0.38 and standard deviation of 9.25% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 183 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco Fundamental High Yield Corporate Bond ETF is not a suitable option for investors seeking to outperform the High-Yield/Junk Bond ETFs segment of the market. Instead, there are other ETFs in the space which investors should consider.
IShares Broad USD High Yield Corporate Bond ETF (USHY - Free Report) tracks BofA Merrill Lynch U.S. High Yield Constrained Index and the iShares iBoxx High Yield Corporate Bond ETF (HYG - Free Report) tracks Markit iBoxx USD Liquid High Yield Index. IShares Broad USD High Yield Corporate Bond ETF has $6.42 billion in assets, iShares iBoxx High Yield Corporate Bond ETF has $14.24 billion. USHY has an expense ratio of 0.15% and HYG charges 0.48%.
Investors looking for cheaper and lower-risk options should consider traditional market cap weighted ETFs that aim to match the returns of the High-Yield/Junk Bond ETFs.
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.