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Is Invesco Global Short Term High Yield Bond ETF (PGHY) a Strong ETF Right Now?
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A smart beta exchange traded fund, the Invesco Global Short Term High Yield Bond ETF (PGHY - Free Report) debuted on 06/20/2013, 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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
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.
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.
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
Because the fund has amassed over $229.99 million, this makes it one of the average sized ETFs in the High-Yield/Junk Bond ETFs. PGHY is managed by Invesco. Before fees and expenses, PGHY seeks to match the performance of the DB Global Short Maturity High Yield Bond Index.
The DB Global Short Maturity High Yield Bond Index tracks US and foreign short-term, non-investment grade bonds denominated in US dollars and is rebalanced quarterly and re-weighted annually.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.35%, making it one of the cheaper products in the space.
It's 12-month trailing dividend yield comes in at 5.16%.
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.
Looking at individual holdings, Invesco Government & Agency Portfolio (AGPXX) accounts for about 4.43% of total assets, followed by Exela Intermediate Llc / Exela Finance Inc-10.00%-7-15-2023 (AO1652368) and Easy Tactic Ltd-5.75%-1-13-2022 (AL9811616).
Its top 10 holdings account for approximately 8.03% of PGHY's total assets under management.
Performance and Risk
So far this year, PGHY has lost about -0.72%, and was up about 0.10% in the last one year (as of 02/08/2022). During this past 52-week period, the fund has traded between $21.08 and $22.25.
The fund has a beta of 0.27 and standard deviation of 10.25% for the trailing three-year period, which makes PGHY a high risk choice in this particular space. With about 462 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco Global Short Term High Yield 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 $7.97 billion in assets, iShares iBoxx High Yield Corporate Bond ETF has $18.57 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 Global Short Term High Yield Bond ETF (PGHY) a Strong ETF Right Now?
A smart beta exchange traded fund, the Invesco Global Short Term High Yield Bond ETF (PGHY - Free Report) debuted on 06/20/2013, 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.
A good option for investors who believe in market efficiency, market cap weighted indexes offer a low-cost, convenient, and transparent way of replicating market returns.
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.
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.
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
Because the fund has amassed over $229.99 million, this makes it one of the average sized ETFs in the High-Yield/Junk Bond ETFs. PGHY is managed by Invesco. Before fees and expenses, PGHY seeks to match the performance of the DB Global Short Maturity High Yield Bond Index.
The DB Global Short Maturity High Yield Bond Index tracks US and foreign short-term, non-investment grade bonds denominated in US dollars and is rebalanced quarterly and re-weighted annually.
Cost & Other Expenses
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive cousins if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.35%, making it one of the cheaper products in the space.
It's 12-month trailing dividend yield comes in at 5.16%.
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.
Looking at individual holdings, Invesco Government & Agency Portfolio (AGPXX) accounts for about 4.43% of total assets, followed by Exela Intermediate Llc / Exela Finance Inc-10.00%-7-15-2023 (AO1652368) and Easy Tactic Ltd-5.75%-1-13-2022 (AL9811616).
Its top 10 holdings account for approximately 8.03% of PGHY's total assets under management.
Performance and Risk
So far this year, PGHY has lost about -0.72%, and was up about 0.10% in the last one year (as of 02/08/2022). During this past 52-week period, the fund has traded between $21.08 and $22.25.
The fund has a beta of 0.27 and standard deviation of 10.25% for the trailing three-year period, which makes PGHY a high risk choice in this particular space. With about 462 holdings, it effectively diversifies company-specific risk.
Alternatives
Invesco Global Short Term High Yield 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 $7.97 billion in assets, iShares iBoxx High Yield Corporate Bond ETF has $18.57 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.