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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?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by Invesco, and has been able to amass over $854.05 million, which makes 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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for PHB are 0.50%, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 3.46%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, 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
Year-to-date, the Invesco Fundamental High Yield Corporate Bond ETF has lost about -5.63% so far, and is down about -2.53% over the last 12 months (as of 03/14/2022). PHB has traded between $18.21 and $19.67 in this past 52-week period.
The ETF has a beta of 0.39 and standard deviation of 8.97% for the trailing three-year period, making it 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.
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 $7.44 billion in assets, iShares iBoxx High Yield Corporate Bond ETF has $16.11 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?
Market cap weighted indexes were created to reflect the market, or a specific segment of the market, and the ETF industry has traditionally been dominated by products based on this strategy.
Investors who believe in market efficiency should consider market cap indexes, as they replicate market returns in a low-cost, convenient, and transparent way.
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.
These indexes attempt to select stocks that have better chances of risk-return performance, based on certain fundamental characteristics or a combination of such characteristics.
Methodologies like equal-weighting, one of the simplest options out there, fundamental weighting, and volatility/momentum based weighting are all choices offered to investors in this space, but not all of them can deliver superior returns.
Fund Sponsor & Index
The fund is managed by Invesco, and has been able to amass over $854.05 million, which makes 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
Expense ratios are an important factor in the return of an ETF and in the long-term, cheaper funds can significantly outperform their more expensive cousins, other things remaining the same.
Annual operating expenses for PHB are 0.50%, which makes it on par with most peer products in the space.
It's 12-month trailing dividend yield comes in at 3.46%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, 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
Year-to-date, the Invesco Fundamental High Yield Corporate Bond ETF has lost about -5.63% so far, and is down about -2.53% over the last 12 months (as of 03/14/2022). PHB has traded between $18.21 and $19.67 in this past 52-week period.
The ETF has a beta of 0.39 and standard deviation of 8.97% for the trailing three-year period, making it 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.
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 $7.44 billion in assets, iShares iBoxx High Yield Corporate Bond ETF has $16.11 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.