ETF Investing
Explore how our ETFs can be cost-effective tools that help you invest in new possibilities for your clients.
INVESCO ETFS
Fixed Income ETFs
Discover how fixed income ETFs can offer compelling opportunities for income generation, portfolio diversification and risk mitigation.
Built for income. Backed by experience.
Whether you’re seeking additional income or want access to diverse sources of return potential across the credit spectrum and capital structure, our fixed income suite offers exposure to both index-based and actively managed ETFs, providing potential expansive solutions to help investors reach their investing goals.
Core and differentiated solutions
Help enhance investment portfolios through efficient core, targeted, ESG, and active exposures based on your investment needs.
Income opportunity
Leverage our strategies when replacing cash and money market investments with potentially higher yielding approaches.
Industry leader
We’ve been in the ETF business for more than two decades and have the global expertise to provide you with the best potential outcomes.
Fixed income ETF categories
AAA CLO ETFs
AAA-rated CLO notes offer some of the most attractive yields among high-quality investment grade credit, while featuring low interest rate sensitivity due to their floating rate structure. They also exhibit low correlation to traditional asset classes, offering diversification benefits.
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AT1 CoCo Bond ETFs
AT1 CoCo bonds are a type of hybrid debt instrument primarily issued by European banks as regulatory capital. For investors seeking yield, these ETFs offer attractive yield potential, with these higher yields driven by subordination in the capital structure rather than issuer quality.
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Overnight Return Swap ETFs
In a volatile market environment, overnight rate products can offer a compelling solution for capital preservation, potentially acting as a ‘safe haven’ against geopolitical shocks and policy uncertainty, and without the duration risk of traditional fixed income.
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Frequently asked questions
Fixed income ETFs give investors access to bonds and other fixed income securities, such as US Treasuries, corporate debt, municipal bonds, and floating rate notes. Some potential benefits of fixed income ETFs include cost effectiveness, liquidity, portfolio transparency, and diversification.
Since bonds are generally not as volatile as other assets, like stocks, they can serve as ballast for an overall portfolio. In particular, ETFs that invest in high quality bonds, like US Treasuries and investment grade rated debt, may help provide portfolio stability. When market uncertainty leads to disruption in the equity markets, fixed income ETFs may provide diversification benefits. Within fixed income ETFs, strategies with lower duration may help preserve capital when interest rates rise.
As their name suggests, many investors use fixed income ETFs to generate income. Some of the bond asset classes that fixed income ETFs hold are traditionally used to seek overall portfolio stability because when market uncertainty leads to disruption in the equity markets, bonds may provide some diversification. Investors can also use specialized fixed income ETFs to help diversify their sources of income as well as help tailor their exposure to credit and duration risk.
Subordinated bond ETFs target exposure to higher-yielding segments of the fixed income market. AT1 CoCo Bond ETFs and Euro Corporate Hybrid ETFs focus on Additional Tier 1 (AT1) contingent convertible bonds and European corporate hybrid debt, respectively; two areas that are known for their income potential and structural complexity. These ETFs are designed to provide diversified access to instruments that sit lower in the capital structure. AT1s are a type of hybrid debt instrument primarily issued by European banks as regulatory capital. They sit just below senior debt within the capital structure, and it is this subordination that drives their higher yield rather than the riskiness of the issuer. Corporate hybrid bonds are similar to AT1s in many ways, including often being issued by companies with strong balance sheets and investment-grade credit ratings. The most obvious difference is that AT1s are only issued by financial institutions whereas corporate hybrids are issued by utilities, telecoms and companies in other non-financial sectors. Corporate hybrids can be appealing for the issuing company because credit rating agencies treat them as part debt/part equity, meaning they can support the issuer’s credit metrics.
AAA CLOs are investment grade securities. A CLO is a special purpose vehicle (SPV) securitised by a pool of assets, including senior secured leveraged loans and bonds. Distributions from the pool are paid out to the CLO’s obligations based on a cashflow waterfall, with first flow to the highest debt tranche of the CLO and continue to the lowest debt tranche followed by the equity. AAA CLO notes are the highest rated tranche of the CLO structure.
These are investment products that aim to deliver returns based on overnight interest rates, typically used for short-term cash management and capital preservation, especially in volatile markets. €STR (Euro Short-Term Rate), SOFR (Secured Overnight Financing Rate), and SONIA (Sterling Overnight Index Average) are official overnight interest rate benchmarks used in Europe, the US, and the UK. They reflect the cost of very short-term borrowing between banks and other financial institutions, and are considered reliable indicators of central bank policy and market liquidity.
