Getting maximum yield in today’s low-rate landscape doesn’t have to be a trying task if investors know where to look. One place is bond-focused exchange-traded funds (ETFs) from Invesco.
One place to start is an active option that puts bond holdings in the hands of the experts. This is where the Invesco Total Return Bond ETF (GTO) comes into play.
GTO an actively managed intermediate-term bond ETF for investors seeking monthly income and total return opportunities. The fund looks for these opportunities in fixed income instruments from derivative instruments, other ETFs, and closed-end funds (CEFs) that invest substantially all of their assets in fixed income instruments.
“Investors should note that active fixed income money managers have a far better track record beating the market than their stock-picking peers,” an ETF Database analysis noted.
High Yield and Emerging Markets Options
Another option to consider is the Invesco Global Short Term High Yield Bond ETF (PGHY). As per the fund description, PGHY seeks to track the investment results (before fees and expenses) of the DB Global Short Maturity High Yield Bond Index.
The underlying index is composed of bonds issued by corporations, as well as sovereign, sub-sovereign, or quasi-government entities that are denominated in U.S. dollars, are rated below investment-grade, have not been marked as defaulted by any rating agency, have three years or less to maturity, have a minimum amount outstanding of at least $250 million, and have a fixed coupon.
Getting that added yield also means that fixed income investors need to look for opportunities outside the U.S., such as emerging markets (EM). This is where an EM bond-focused fund like the Invesco Emerging Markets Sovereign Debt ETF (PCY) can help.
PCY is based on the DBIQ Emerging Market USD Liquid Balanced Index. The fund will normally invest at least 80% of its total assets in securities that comprise the index.
The index tracks the potential returns of a theoretical portfolio of liquid emerging markets U.S. dollar-denominated government bonds issued by more than 20 emerging market countries. The countries in the index are selected annually pursuant to a proprietary index methodology, and the fund and the index are rebalanced and reconstituted quarterly.
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