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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.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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
The fund is sponsored by Invesco. It has amassed assets over $739.10 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics 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.
The fund has a 12-month trailing dividend yield of 3.82%.
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.
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.
The top 10 holdings account for about 15.91% of total assets under management.
Performance and Risk
The ETF has lost about -9.93% and is down about -10.07% so far this year and in the past one year (as of 09/20/2022), respectively. PHB has traded between $16.74 and $19.61 during this last 52-week period.
The ETF has a beta of 0.42 and standard deviation of 9.94% 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.
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 $8.31 billion in assets, iShares iBoxx High Yield Corporate Bond ETF has $12.59 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?
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.
Market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns, and are a good option for investors who believe in market efficiency.
However, some investors believe in the possibility of beating the market through exceptional stock selection, and choose a different type of fund that tracks non-cap weighted strategies: smart beta.
By attempting to pick stocks that have a better chance of risk-return performance, non-cap weighted indexes are based on certain fundamental characteristics, or a combination of such.
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
The fund is sponsored by Invesco. It has amassed assets over $739.10 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics 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.
The fund has a 12-month trailing dividend yield of 3.82%.
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.
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.
The top 10 holdings account for about 15.91% of total assets under management.
Performance and Risk
The ETF has lost about -9.93% and is down about -10.07% so far this year and in the past one year (as of 09/20/2022), respectively. PHB has traded between $16.74 and $19.61 during this last 52-week period.
The ETF has a beta of 0.42 and standard deviation of 9.94% 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.
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 $8.31 billion in assets, iShares iBoxx High Yield Corporate Bond ETF has $12.59 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.