The Invesco Fundamental High Yield Corporate Bond ETF (PHB) 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?
The ETF industry has long been dominated by products based on market cap weighted indexes, a strategy created to reflect the market or a particular market segment.
Market cap weighted indexes work great for investors who believe in market efficiency. They provide 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.
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.
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 $377.88 million, making it one of the average sized ETFs in the High-Yield/Junk Bond ETFs. This particular fund 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
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.
It's 12-month trailing dividend yield comes in at 5.49%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, 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 1.14% of the fund's total assets, followed by Synchrony Financial-7.25%-02-02-2033 (SYF) and Pg&e Corp-5.25%-07-01-2030 (PCG).
PHB's top 10 holdings account for about 9.79% of its total assets under management.
Performance and Risk
So far this year, PHB has added about 0.58%, and is up roughly 7.4% in the last one year (as of 02/06/2026). During this past 52-week period, the fund has traded between $17.50 and $18.72.
PHB has a beta of 0.38 and standard deviation of 5.10% for the trailing three-year period, which makes the fund a high risk choice in the space. With about 281 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 $17.64 billion in assets, iShares Broad USD High Yield Corporate Bond ETF has $25.79 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.
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Invesco Fundamental High Yield Corporate Bond ETF (PHB): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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