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Is Invesco Fundamental High Yield Corporate Bond ETF (PHB) a Strong ETF Right Now?
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Launched on 11/15/2007, the Invesco Fundamental High Yield Corporate Bond ETF (PHB - Free Report) is a smart beta exchange traded fund offering broad exposure to the High-Yield/Junk Bond ETFs category of the market.
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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
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
PHB is managed by Invesco, and this fund has amassed over $564.51 million, which makes it one of the larger ETFs in the High-Yield/Junk Bond ETFs. 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
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.
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 5.30%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
Taking into account individual holdings, Synchrony Financial-7.25%-02-02-2033 accounts for about 1.26% of the fund's total assets, followed by United Airlines Holdings Inc-4.88%-01-15-2025 and Windsor Holdings Iii Llc-8.50%-06-15-2030.
The top 10 holdings account for about 10.66% of total assets under management.
Performance and Risk
So far this year, PHB has gained about 3.07%, and it's up approximately 9.13% in the last one year (as of 07/16/2024). During this past 52-week period, the fund has traded between $16.83 and $18.23.
PHB has a beta of 0.45 and standard deviation of 7.23% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 225 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 $13.47 billion in assets, iShares iBoxx $ High Yield Corporate Bond ETF has $17.23 billion. USHY has an expense ratio of 0.08% and HYG charges 0.49%.
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?
Launched on 11/15/2007, the Invesco Fundamental High Yield Corporate Bond ETF (PHB - Free Report) is a smart beta exchange traded fund offering broad exposure to the High-Yield/Junk Bond ETFs category of the market.
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.
Because market cap weighted indexes provide a low-cost, convenient, and transparent way of replicating market returns, they work well for investors who believe in market efficiency.
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
PHB is managed by Invesco, and this fund has amassed over $564.51 million, which makes it one of the larger ETFs in the High-Yield/Junk Bond ETFs. 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
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.
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 5.30%.
Sector Exposure and Top Holdings
ETFs offer diversified exposure and thus minimize single stock risk, but it is still important to delve into a fund's holdings before investing. Most ETFs are very transparent products and many disclose their holdings on a daily basis.
Taking into account individual holdings, Synchrony Financial-7.25%-02-02-2033 accounts for about 1.26% of the fund's total assets, followed by United Airlines Holdings Inc-4.88%-01-15-2025 and Windsor Holdings Iii Llc-8.50%-06-15-2030.
The top 10 holdings account for about 10.66% of total assets under management.
Performance and Risk
So far this year, PHB has gained about 3.07%, and it's up approximately 9.13% in the last one year (as of 07/16/2024). During this past 52-week period, the fund has traded between $16.83 and $18.23.
PHB has a beta of 0.45 and standard deviation of 7.23% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 225 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 $13.47 billion in assets, iShares iBoxx $ High Yield Corporate Bond ETF has $17.23 billion. USHY has an expense ratio of 0.08% and HYG charges 0.49%.
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.