Designed to provide broad exposure to the High-Yield/Junk Bond ETFs category of the market, the Invesco Fundamental High Yield Corporate Bond ETF (PHB) is a smart beta exchange traded fund launched on 11/15/2007.
What Are Smart Beta ETFs?
The ETF industry has traditionally been dominated by products based on market capitalization weighted indexes that are designed to represent the market or a particular segment of the market.
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.
If you're the kind of investor who would rather try and beat the market through good stock selection, then smart beta funds are your best choice; this fund class is known for tracking non-cap weighted strategies.
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.
While this space offers a number of choices to investors, including simplest equal-weighting, fundamental weighting and volatility/momentum based weighting methodologies, not all these strategies have been able to deliver superior results.
Fund Sponsor & Index
The fund is sponsored by Invesco. It has amassed assets over $395.38 million, making it one of the average sized ETFs in the High-Yield/Junk Bond ETFs. Before fees and expenses, this particular fund 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
Investors should also pay attention to an ETF's expense ratio. Lower cost products will produce better results than those with a higher cost, assuming all other metrics remain 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 5.48%.
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, Albertsons Cos Inc / Safeway Inc / New Albertsons Lp / Albertsons Llc-6.25%-03-15-2033 (ACI) accounts for about 1.18% of the fund's total assets, followed by Pg&e Corp-5.25%-07-01-2030 (PCG) and Synchrony Financial-7.25%-02-02-2033 (SYF).
The top 10 holdings account for about 10.13% of total assets under management.
Performance and Risk
The ETF has added roughly 8.25% so far this year and is up roughly 6.91% in the last one year (as of 12/04/2025). In the past 52-week period, it has traded between $17.50 and $18.72
The ETF has a beta of 0.38 and standard deviation of 5.45% for the trailing three-year period, making it a high risk choice in the space. With about 266 holdings, it effectively diversifies company-specific risk .
Alternatives
Invesco Fundamental High Yield Corporate Bond ETF is a reasonable option for investors seeking to outperform the High-Yield/Junk Bond ETFs segment of the market. However, there are other ETFs in the space which investors could consider.
iShares iBoxx $ High Yield Corporate Bond ETF (HYG) tracks Markit iBoxx USD Liquid High Yield Index and the iShares Broad USD High Yield Corporate Bond ETF (USHY) tracks BofA Merrill Lynch U.S. High Yield Constrained Index. iShares iBoxx $ High Yield Corporate Bond ETF has $18.6 billion in assets, iShares Broad USD High Yield Corporate Bond ETF has $25.46 billion. HYG has an expense ratio of 0.49% and USHY changes 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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Invesco Fundamental High Yield Corporate Bond ETF (PHB): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
