Invesco on Wednesday launched a suite of eight factor bond exchange-traded funds it says are a collaboration between its in-house fixed-income team and its recently formed indexing division.
Together, the two units joined heads to create a methodology based on models used in several active funds. From there, the indexing team selected securities from an investment universe of all U.S. dollar-denominated bonds issued by global companies, governments, and government agencies to create the funds’ underlying indexes. The indexes will rebalance monthly.
According to Dan Draper, Invesco’s global head of ETFs, the new funds aim to give investors broad-based exposure in fixed income while using factors to navigate the challenges in the current rising rate environment.
The lineup comprises the following:
Invesco Corporate Income Defensive ETF (IHYD)
Invests in U.S. corporate bonds having the highest quality scores within an eligible universe of U.S. high-yield bonds, as well as bonds with the lowest credit rating considered investment grade. All eligible bonds have a quality score based on their maturity and credit rating. The expense ratio is 0.23 percent
Invesco Corporate Income Value ETF (IHYV)
The portfolio provides exposure to higher value, U.S. high-yield bonds and bonds with the lowest credit rating considered investment grade. Higher value bonds are considered those with higher yields that could have greater returns in certain markets. The holdings are assigned a quality adjusted value score devised from a combination of value and quality factors. The expense ratio is 0.23 percent.
Invesco Emerging Markets Debt Defensive ETF (IEMD)
The constituents are emerging-market debt securities with relatively higher-quality characteristics such as higher credit ratings and shorter maturities, and have quality scores associated with a bond’s maturity and credit rating. The expense ratio is 0.29 percent.
Invesco Emerging Markets Debt Value ETF IEMV
Portfolio holdings are emerging-market debt securities thought to have higher-quality characteristics, including higher credit ratings and shorter maturities. Eligible bonds have a quality adjusted value score based on a combination of value and quality factors. The expense ratio is 0.29 percent.
Invesco Investment Grade Defensive ETF (IIGD)
Invests in U.S. investment grade bonds with relatively higher-quality characteristics, including higher credit ratings and shorter maturities. Bonds have a quality score calculated based on their maturity and credit rating. The expense ratio is 0.13 percent.
Invesco Investment Grade Value ETF (IIGV)
Holds higher value, U.S. investment grade bonds with relatively higher-quality characteristics such as higher credit ratings and shorter maturities. Eligible securities are assigned a quality adjusted value score based on a combination of value and quality factors. The expense ratio is 0.13 percent.