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Is Invesco Fundamental High Yield Corporate Bond ETF (PHB) a Strong ETF Right Now?
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The Invesco Fundamental High Yield Corporate Bond ETF (PHB - Free Report) made its debut on 11/15/2007, and is a smart beta exchange traded fund that provides 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.
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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track 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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
PHB is managed by Invesco, and this fund has amassed over $377.73 million, which makes it one of the average sized ETFs in the High-Yield/Junk Bond ETFs. PHB, before fees and expenses, 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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.50%, making it on par with most peer products in the space.
PHB's 12-month trailing dividend yield is 5.73%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Taking into account individual holdings, Synchrony Financial-7.25%-02-02-2033 (87165BAU7) accounts for about 1.22% of the fund's total assets, followed by United Airlines Inc-4.62%-04-15-2029 (90932LAH0) and Ford Motor Credit Co Llc-3.38%-11-13-2025 (345397B28).
Its top 10 holdings account for approximately 9.71% of PHB's total assets under management.
Performance and Risk
So far this year, PHB has gained about 0.97%, and is up about 6.61% in the last one year (as of 01/24/2025). During this past 52-week period, the fund has traded between $17.74 and $18.61.
PHB has a beta of 0.45 and standard deviation of 7.26% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 255 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 iBoxx $ High Yield Corporate Bond ETF (HYG - Free Report) tracks Markit iBoxx USD Liquid High Yield Index and the iShares Broad USD High Yield Corporate Bond ETF (USHY - Free Report) tracks BofA Merrill Lynch U.S. High Yield Constrained Index. IShares iBoxx $ High Yield Corporate Bond ETF has $15.49 billion in assets, iShares Broad USD High Yield Corporate Bond ETF has $18.99 billion. HYG has an expense ratio of 0.49% and USHY charges 0.08%.
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?
The Invesco Fundamental High Yield Corporate Bond ETF (PHB - Free Report) made its debut on 11/15/2007, and is a smart beta exchange traded fund that provides 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.
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.
There are some investors, though, who think it's possible to beat the market with great stock selection; this group likely invests in another class of funds known as smart beta, which track 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.
The smart beta space gives investors many different choices, from equal-weighting, one of the simplest strategies, to more complicated ones like fundamental and volatility/momentum based weighting. However, not all of these methodologies have been able to deliver remarkable returns.
Fund Sponsor & Index
PHB is managed by Invesco, and this fund has amassed over $377.73 million, which makes it one of the average sized ETFs in the High-Yield/Junk Bond ETFs. PHB, before fees and expenses, 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
Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.
Annual operating expenses for this ETF are 0.50%, making it on par with most peer products in the space.
PHB's 12-month trailing dividend yield is 5.73%.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
Taking into account individual holdings, Synchrony Financial-7.25%-02-02-2033 (87165BAU7) accounts for about 1.22% of the fund's total assets, followed by United Airlines Inc-4.62%-04-15-2029 (90932LAH0) and Ford Motor Credit Co Llc-3.38%-11-13-2025 (345397B28).
Its top 10 holdings account for approximately 9.71% of PHB's total assets under management.
Performance and Risk
So far this year, PHB has gained about 0.97%, and is up about 6.61% in the last one year (as of 01/24/2025). During this past 52-week period, the fund has traded between $17.74 and $18.61.
PHB has a beta of 0.45 and standard deviation of 7.26% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 255 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 iBoxx $ High Yield Corporate Bond ETF (HYG - Free Report) tracks Markit iBoxx USD Liquid High Yield Index and the iShares Broad USD High Yield Corporate Bond ETF (USHY - Free Report) tracks BofA Merrill Lynch U.S. High Yield Constrained Index. IShares iBoxx $ High Yield Corporate Bond ETF has $15.49 billion in assets, iShares Broad USD High Yield Corporate Bond ETF has $18.99 billion. HYG has an expense ratio of 0.49% and USHY charges 0.08%.
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.