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Is Invesco Fundamental High Yield Corporate Bond ETF (PHB) a Strong ETF Right Now?
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Designed to provide broad exposure to the High-Yield/Junk Bond ETFs category of the market, the Invesco Fundamental High Yield Corporate Bond ETF (PHB - Free Report) is a smart beta exchange traded fund launched on 11/15/2007.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $740.88 million, this makes it one of the larger ETFs in the High-Yield/Junk Bond ETFs. PHB is managed by Invesco. PHB seeks to match the performance of the RAFI Bonds US High Yield 1-10 Index before fees and expenses.
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 this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 3.49%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
When you look at individual holdings, Centene Corp-4.62%-12-15-2029 accounts for about 2.11% of the fund's total assets, followed by United Airlines Holdings Inc-4.88%-1-15-2025 and Ford Motor Credit Co Llc-3.38%-11-13-2025.
PHB's top 10 holdings account for about 15.91% of its total assets under management.
Performance and Risk
Year-to-date, the Invesco Fundamental High Yield Corporate Bond ETF has lost about -9.04% so far, and is down about -8.47% over the last 12 months (as of 11/21/2022). PHB has traded between $16.37 and $19.46 in this past 52-week period.
The ETF has a beta of 0.41 and standard deviation of 10.34% for the trailing three-year period, making it a high risk choice in the space. With about 160 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.
SPDR Bloomberg High Yield Bond ETF (JNK - Free Report) tracks Bloomberg Barclays High Yield Very Liquid Index and the iShares iBoxx High Yield Corporate Bond ETF (HYG - Free Report) tracks Markit iBoxx USD Liquid High Yield Index. SPDR Bloomberg High Yield Bond ETF has $9.11 billion in assets, iShares iBoxx High Yield Corporate Bond ETF has $17.40 billion. JNK has an expense ratio of 0.40% 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?
Designed to provide broad exposure to the High-Yield/Junk Bond ETFs category of the market, the Invesco Fundamental High Yield Corporate Bond ETF (PHB - Free Report) is a smart beta exchange traded fund launched on 11/15/2007.
What Are Smart Beta ETFs?
Products that are based on market cap weighted indexes, which are strategies designed to reflect a specific market segment or the market as a whole, have traditionally dominated the ETF industry.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
But, there are some investors who would rather invest in smart beta funds; these funds track non-cap weighted strategies, and are a strong option for those who prefer choosing great stocks in order to beat the market.
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.
This area offers many different investment choices, such as simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies; however, not all of these strategies can deliver superior results.
Fund Sponsor & Index
Because the fund has amassed over $740.88 million, this makes it one of the larger ETFs in the High-Yield/Junk Bond ETFs. PHB is managed by Invesco. PHB seeks to match the performance of the RAFI Bonds US High Yield 1-10 Index before fees and expenses.
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 this ETF, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 3.49%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
When you look at individual holdings, Centene Corp-4.62%-12-15-2029 accounts for about 2.11% of the fund's total assets, followed by United Airlines Holdings Inc-4.88%-1-15-2025 and Ford Motor Credit Co Llc-3.38%-11-13-2025.
PHB's top 10 holdings account for about 15.91% of its total assets under management.
Performance and Risk
Year-to-date, the Invesco Fundamental High Yield Corporate Bond ETF has lost about -9.04% so far, and is down about -8.47% over the last 12 months (as of 11/21/2022). PHB has traded between $16.37 and $19.46 in this past 52-week period.
The ETF has a beta of 0.41 and standard deviation of 10.34% for the trailing three-year period, making it a high risk choice in the space. With about 160 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.
SPDR Bloomberg High Yield Bond ETF (JNK - Free Report) tracks Bloomberg Barclays High Yield Very Liquid Index and the iShares iBoxx High Yield Corporate Bond ETF (HYG - Free Report) tracks Markit iBoxx USD Liquid High Yield Index. SPDR Bloomberg High Yield Bond ETF has $9.11 billion in assets, iShares iBoxx High Yield Corporate Bond ETF has $17.40 billion. JNK has an expense ratio of 0.40% 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.