3 Bond Funds to Consider in Today's ETF Bonanza

Investors’ appetite for ETFs is only growing, and that includes a growing interest in bond funds. Invesco offers up three (among many) for consideration.

A State Street Global Advisors report noted that “ETFs first gained institutional credibility in the world of
equities, but they are now a popular and proven vehicle with which to access the fixed income market.”

“Investors have plans to increase ETF use within their larger fixed income portfolios,” the report said. “Figure 3 shows that seven in ten (71%) survey respondents have a strong appetite to increase the use of ETFs within their global aggregate/core FI portfolios over the next three years.”

“Nearly half (48%) of respondents have a strong appetite to increase the use of ETFs within their non-core/satellite FI exposures over the next three years,” the report added. “In addition, more than two-thirds (68%) of respondents say they are prioritizing increased use of ETFs for fixed income portfolio construction over the next three years.”

3 Funds To Consider As More Investors Plan to Add More ETFs

3 Funds to Consider

One ETF to consider in today’s market is the Invesco Investment Grade Defensive ETF (IIGV). Getting quality bond exposure is always a must, and IIGV gives more conservative ETF investors just that.

The fund generally will invest at least 80% of its total assets in securities that comprise the index, which is designed to provide exposure to U.S. investment-grade bonds with relatively higher-quality characteristics, including higher credit ratings and shorter maturities.

All eligible bonds are assigned a quality score, which is calculated based on the bond’s maturity and credit rating. The fund does not purchase all the securities in the index; instead, it utilizes a “sampling” methodology to seek to achieve its investment objective. The fund and the index are rebalanced monthly.

Another fund to consider is the Invesco International Corporate Bond ETF (PICB). The fund seeks to track the investment results (before fees and expenses) of the S&P International Corporate Bond Index®, which measures the performance of investment-grade corporate bonds issued in the following currencies of Group of Ten countries, excluding the U.S. Dollar (USD): Australian Dollar (AUD), British Pound (GBP), Canadian Dollar (CAD), Euro (EUR), Japanese Yen (JPY), New Zealand Dollar (NZD), Norwegian Krone (NOK), Swedish Krona (SEK), and Swiss Franc (SFR).

Lastly, there’s the Invesco Total Return Bond ETF (GTO)—GTO is an actively managed intermediate-term bond ETF for investors seeking monthly income and total return opportunities. The fund will invest at least 80% of its total assets in fixed income instruments of varying maturities and of any credit qualities.

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