Invesco expanded on its line of smart beta offerings with two new multi-factor fixed-income ETFs to help bond investors access more high quality and higher yielding segments of the debt markets.
Invesco recently launched the Invesco Multi-Factor Defensive Core Fixed Income ETF (Cboe: IMFD) and the Invesco Multi-Factor Income ETF (Cboe: IMFI), which have a 0.12% and 0.16% expense ratio, respectively.
The Invesco Multi-Factor Defensive Core Fixed Income ETF tries to reflect the performance of the Invesco Multi-Factor Defensive Core Index, which is designed to provide multi-factor exposure to fixed income securities, according to the fund’s prospectus.
Specifically, the underlying index has a more defensive tilt or a safer debt exposure that follows a targeted weighting methodology to gain exposure to bond market segments, including Invesco U.S. Treasury 1-3 Years Index 55%, Invesco U.S. Fixed Rate 30-Year MBS Index 20%, Invesco Investment Grade Defensive Index 15% and Invesco Emerging Markets Debt Defensive Index 10%.
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.