Investor appetite for ETFs is only growing, and that includes a growing interest in bond funds. Invesco offers three (of several) for review.
A State Street World Advisors Report noted that âETFs first acquired institutional credibility in the world of
equities, but they are now a popular and proven vehicle for entering the fixed income market.
âInvestors intend to increase the use of ETFs in their larger fixed income portfolios,â the report says. âFigure 3 shows that seven in ten respondents (71%) to the survey have a strong appetite to increase the use of ETFs in their global portfolios of global / core institutions over the next three years. “
“Almost half (48%) of those surveyed are keen to increase the use of ETFs as part of their non-core FI / satellite exposures over the next three years,” the report adds. âIn addition, more than two-thirds (68%) of respondents say they favor increased use of ETFs for building bond portfolios over the next three years.
3 funds to consider
An ETF to consider in today’s market is the Invesco Investment Grade Defensive ETF (IIGV). Getting exposure to quality bonds is always a must, and IIGV offers just that to more conservative ETF investors.
The fund will generally invest at least 80% of its total assets in the securities that make up the index, which is designed to provide exposure to higher quality US bonds with relatively higher quality characteristics, including higher credit ratings and shorter maturities.
All eligible bonds are assigned a quality rating, which is calculated based on the maturity and credit rating of the bond. The fund does not buy all the securities in the index; instead, it uses a âsamplingâ 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 replicate the investment results (before fees and expenses) of the S&P International Corporate Bond IndexÂ®, which measures the performance of high quality corporate bonds issued in the following currencies of the Group of Ten countries , excluding US dollar (USD): Australian dollar (AUD), British pound (GBP), Canadian dollar (CAD), euro (EUR), Japanese yen (JPY), New Zealand dollar (NZD), koruna Norwegian (NOK), Swedish krona (SEK), and Swiss franc (SFR).
Finally, there is the Invesco Total Return Bond ETF (GTO)âGTO is an actively managed medium-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 various maturities and of all credit qualities.
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