Meanwhile, the Invesco Multi-Factor Income ETF tries to reflect the performance of the Invesco Multi-Factor Income Index, which also provides multi-factor exposure to fixed income securities. However, its portfolio consists of less defensive plays and more value plays, so investors may be exposed to potentially greater returns but greater risks.
Specifically, IMFI’s underlying index includes targeted weights to bond market segments, including Invesco U.S. Fixed Rate 30-Year MBS Index 25%, Invesco Emerging Markets Debt Value Index 15%, Invesco High Yield Defensive Index 15%, Invesco Investment Grade Value Index 15%, Invesco Emerging Markets Debt Defensive Index 10%, Invesco High Yield Value Index 10% and Invesco Investment Grade Defensive Index 10%.
In contrast, traditional passive index-based bond funds typically follow a market capitalization-weighted indexing methodology where issuers with the largest amount of debt outstanding have a larger weight.
For more information on new fund products, visit our new ETFs category.