Invesco launches new multi-factor bond ETFs in US

Dec 11th, 2018 | By | Category: Fixed Income

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Invesco has launched two new factor-based fixed income ETFs on Cboe BZX Exchange: the Invesco Multi-Factor Defensive Core Fixed Income ETF (IMFD US) and the Invesco Multi-Factor Income ETF (IMFI US).

Invesco launches multi-factor aggregate bond ETFs

The new launches bring the number of multi-factor, multi-sector Invesco fixed income ETFs to four.

The funds provide multi-factor exposure to a range of fixed income sectors including Treasury bonds, investment grade and high yield corporate bonds, mortgage-backed securities, and emerging markets debt.

According to Invesco, the funds focus on harvesting returns attributable to value and quality factors.

Each fund tracks a proprietary index developed in-house.

IMFD tracks the Invesco Multi-Factor Defensive Core Index and seeks to provide strong capital preservation with some additional income.

The index is tilted predominantly to Treasury bonds and caters to investors looking for a defensive, modestly income-producing portfolio. Over half (55%) of the total weight is allocated to 1-3 year Treasuries ( 55%), while 20% is allocated to mortgage-backed securities,15% to higher-quality US investment grade, and 10% to emerging markets debt.

IMFI tracks the Invesco Multi-Factor Income Index and seeks to provide enhanced risk-adjusted returns relative to a comparable market value weighted index with an attractive level of additional income.

The index is more diversified across fixed income asset classes, including higher yielding categories. Approximately 25% is allocated to mortgage-backed securities, 25% to quality US investment grade, 25% to high yield, and 25% to emerging markets debt.

IMFD comes with an expense ratio of 0.12%, while IMFI’s expense ratio is slightly higher at 0.16%.

The funds expand Invesco’s multi-factor fixed income ETF line-up to four.

The two other funds in the family include the Invesco Multi-Factor Core Fixed Income ETF (IMFC US) targeting US investment grade bonds, mortgage-backed securities, and Treasuries, and the Invesco Multi-Factor Core Plus Fixed Income ETF (IMFP US) which additionally incorporates high-yield bonds and emerging market debt in its investment scope.

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