You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Is Invesco Fundamental High Yield Corporate Bond ETF (PHB) a Strong ETF Right Now?
Read MoreHide Full Article
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?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
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.
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
The fund is sponsored by Invesco. It has amassed assets over $573.03 million, making 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
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.
The fund has a 12-month trailing dividend yield of 5%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
Looking at individual holdings, Synchrony Financial-7.25%-02-02-2033 (87165BAU7) accounts for about 1.23% of total assets, followed by United Airlines Inc-4.62%-04-15-2029 (90932LAH0) and Windsor Holdings Iii Llc-8.50%-06-15-2030 (97360AAA5).
The top 10 holdings account for about 8.3% of total assets under management.
Performance and Risk
The ETF has gained about 6.23% so far this year and is up roughly 13.29% in the last one year (as of 09/20/2024). In the past 52-week period, it has traded between $16.83 and $18.59.
The fund has a beta of 0.45 and standard deviation of 7.23% for the trailing three-year period, which makes PHB a high risk choice in this particular space. With about 243 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 $16.68 billion in assets, iShares Broad USD High Yield Corporate Bond ETF has $18.58 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.
In-Depth Zacks Research for the Tickers Above
Normally $25 each - click below to receive one report FREE:
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?
For a long time now, the ETF industry has been flooded with products based on market capitalization weighted indexes, which are designed to represent the broader market or a particular market segment.
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.
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
The fund is sponsored by Invesco. It has amassed assets over $573.03 million, making 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
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.
The fund has a 12-month trailing dividend yield of 5%.
Sector Exposure and Top Holdings
Most ETFs are very transparent products, and disclose their holdings on a daily basis. ETFs also offer diversified exposure, which minimizes single stock risk, though it's still important for investors to research a fund's holdings.
Looking at individual holdings, Synchrony Financial-7.25%-02-02-2033 (87165BAU7) accounts for about 1.23% of total assets, followed by United Airlines Inc-4.62%-04-15-2029 (90932LAH0) and Windsor Holdings Iii Llc-8.50%-06-15-2030 (97360AAA5).
The top 10 holdings account for about 8.3% of total assets under management.
Performance and Risk
The ETF has gained about 6.23% so far this year and is up roughly 13.29% in the last one year (as of 09/20/2024). In the past 52-week period, it has traded between $16.83 and $18.59.
The fund has a beta of 0.45 and standard deviation of 7.23% for the trailing three-year period, which makes PHB a high risk choice in this particular space. With about 243 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 $16.68 billion in assets, iShares Broad USD High Yield Corporate Bond ETF has $18.58 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.