Fixed Income Factor Investing


Is your fixed income portfolio on the right path?


Factors can help you target the precise outcomes you need.


  • Investment grade, high yield and emerging markets are considered amongst basic bond asset classes, but there can be big differences among individual bonds within these categories that may affect your outcome.
  • Value and quality are specific factors that speak to a bond’s potential to deliver income, provide capital appreciation and help defend against risk.

Fixed income factors:

A critical component of outcome-oriented investment strategies

Expanding your investment choices to include factors — either alone or in combination —can help you pursue the outcome you need, while also positioning your clients’ bond portfolios for different market environments.

Fixed Income Factors for Value, Quality, and Mixed Factor Fixed Income Factors for Value, Quality, and Mixed Factor

For illustrative purposes only. Factor investing is an investment strategy in which securities are chosen based on certain characteristics and attributes. Diversification does not guarantee a profit or eliminate the risk of loss.


Invesco’s fixed-income factor ETFs are a critical component to outcome-oriented strategies. They allow you to mix-and-match among asset classes and factors based on your targeted outcomes, with the convenience and low cost* of an ETF.

Customized, outcome-based index construction

The underlying indexes for Invesco’s fixed income factor ETFs were built by Invesco Indexing, LLC — an experienced team of investment professionals who use a transparent, systematic and repeatable approach.

Invesco Indexing provides indexes that are:

  • Client focused – designed to meet investors’ unique investment goals, resulting in highly customized, needs-based outcomes.
  • Systematically constructed – use time-tested, rules-based methodologies that help mitigate the effects of behavioral biases and deliver clear, understandable outcomes.

Backed by global resources

Invesco Indexing leverages the experience and resources of Invesco – a leading global investment firm.

  • > $900 billion in assets6
  • Serving investors in 150+ countries world-wide

Learn more:

Invesco Fixed Income Factor Exchange Traded Funds (ETFs)

Invesco Whitepaper Series: Why should investors consider credit factors in fixed income?

Index Approach

Invesco Ltd.

> $900 billion
in assets6

Serving investors
in +150 countries
world-wide

Invesco's Value Fixed Income Factor ETFs

Focused on income and capital appreciation potential

Each ETF provides exposure to an underlying index that seeks to emphasize bonds with high yields and attractive prices, a measure of value, while attempting to screen out those with the highest chance of default. The intended outcome is to potentially help provide:

  • Higher yields and income generation
  • Upside participation and capital appreciation in rising markets

Value
IIGV Invesco Investment Grade Value ETF
Focuses on higher-value, US investment grade bonds with higher yields that may provide greater returns in certain markets.
Underlying index:
Invesco Investment Grade Value Index3

Benchmark index:
Markit iBoxx USD Liquid Investment Grade Index

Total expense ratio: 0.13%
IHYV Invesco Corporate Income Value ETF
Focuses on higher-value, US high yield bonds and bonds rated BBB- and below with higher yields that may provide greater returns in certain markets.
Underlying index:
Invesco High Yield Value Index3

Benchmark index:
Markit iBoxx USD Liquid High Yield Index

Total expense ratio: 0.23%
IEMV Invesco Emerging Markets Debt
Value ETF

Focuses on higher-value, emerging market bonds with higher yields that may provide greater returns in certain markets.
Underlying index:
Invesco Emerging Markets Debt Value Index3

Benchmark index:
JP Morgan Emerging Markets Bond Index (EMBI Global)

Total expense ratio: 0.29%
Value

A value approach
to fixed income
may help add
income and capital
appreciation potential
to a portfolio

Invesco’s Defensive Fixed Income Factor ETFs

Focused on “quality” and potential downside mitigation

Each ETF provides exposure to an underlying index that seeks to avoid more volatile securities by avoiding those with relatively higher probabilities of default, while at the same time emphasizing “quality” bonds with shorter maturities and higher credit quality. The intended outcome is to provide the potential for:

The intended ouctome is to provide the potential for:

  • Capital preservation during periods of market stress.
  • Enhanced risk-adjusted returns

Defensive
IIGD Invesco Investment Grade
Defensive ETF

Focuses on US investment grade bonds with relatively higher-quality characteristics, such as higher credit ratings and shorter maturities as compared to the overall US investment grade bond market.
Underlying index:
Invesco Investment Grade Defensive Index4

Benchmark index:
Markit iBoxx USD Liquid Investment Grade Index

Total expense ratio: 0.13%
IHYD Invesco Corporate Income Defensive ETF
Focuses on an investment universe of US corporate bonds rated BBB- and below that have the highest “quality score,” defined by shorter maturities and higher credit ratings.
Underlying index:
Invesco High Yield Defensive Index4

Benchmark index:
Markit iBoxx USD Liquid High Yield Index

Total expense ratio: 0.23%
IEMD Invesco Emerging Markets Debt
Defensive ETF

Focuses on emerging markets debt securities with relatively higher-quality characteristics, such as higher credit ratings and shorter maturities as compared to the overall emerging market sovereign debt market.
Underlying index:
Invesco Emerging Markets Debt
Defensive Index4

Benchmark index:
JP Morgan Emerging Markets Bond Index (EMBI Global)

Total expense ratio: 0.29%

A defensive
approach to fixed
income portfolio
construction may
offer potential
capital preservation,
especially during
poor market
environments.

Invesco’s Multi-Factor Fixed Income ETFs

Balanced factor exposure within a single strategy

Each ETF provides exposure to an underlying index that is built using an index-of-index approach. This blended methodology is intended to potentially provide investors:

  • Portfolio diversification through broad fixed income factor and underlying asset exposures
  • A robust fixed income portfolio that has the potential to perform well in various market conditions

Multi-Factor
IMFC Invesco Multi-Factor Core Fixed
Income ETF

Focuses on multi-factor exposure to a core group of fixed income securities, including US investment grade bonds, mortgage-backed securities and Treasuries.
Underlying index:
Invesco Multi-Factor Core Index5

Benchmark index:
Bloomberg Barclays U.S. Aggregate Bond Index

Total expense ratio: 0.12%
IMFP Invesco Multi-Factor Core Plus Fixed
Income ETF

Focuses on multi-factor exposure to an expanded set of fixed income securities, including US investment grade and high yield bonds, mortgage-backed securities, Treasuries, and emerging markets debt.
Underlying index:
Invesco Multi-Factor Core Plus Index5

Benchmark index:
Bloomberg Barclays U.S. Aggregate Bond Index

Total expense ratio: 0.16%
Multi-Factor

A multi-factor
approach may help
provide a balanced
combination of
income, capital
preservation and
capital appreciation
potential.

Risk & Other Information

* Since ordinary brokerage commissions apply for each buy and sell transaction, frequent trading activity may increase the cost of ETFs.

‡ The Funds’ index provider is Invesco Indexing LLC; the investment adviser is Invesco Capital Management LLC and the distributor is Invesco Distributors, Inc. All entities are indirect, wholly owned subsidiaries of Invesco Ltd.

1 Higher value bonds are characterized as those with higher yields that may provide greater returns in certain markets. Quality bonds are calculated based on maturity and credit rating; they are characterized as those with higher credit ratings and shorter maturities relative to other bonds and in comparison to the overall market in a respective asset class.

2 Multi-factor emphasizes both higher quality and attractively-valued bonds. It is designed to provide multi-factor exposure to fixed income securities.

3 Index and Fund rebalancing occurs monthly.

4 Index and Fund rebalancing occurs monthly.

5 Index and Fund rebalancing occurs monthly.

6 as of March 31, 2018.

A credit rating is an assessment provided by a recognized statistical rating organization of the creditworthiness of an issuer with respect to debt obligations, including specific securities, money market instruments or other debts. Ratings are measured on a scale that generally ranges from AAA (highest) to D (lowest); ratings are subject to change without notice. If securities are rated differently by the rating agencies, the higher rating is applied. “Not rated” indicates the debtor was not rated and should not be interpreted as indicating low quality. For more information on the rating methodology, please visit standardandpoors.com and select “Understanding Ratings” under Rating Resources on the home page; moodys.com and select “Rating Methodologies” under Research and Ratings on the home page; and/or fitchratings.com and select “Ratings Definitions” on the home page.

The Invesco Investment Grade Defensive Index is designed to provide exposure to U.S. investment grade bonds with relatively-higher quality characteristics, including relatively higher credit ratings and shorter maturities as compared to the overall market for U.S. investment grade bonds.

The Invesco High Yield Defensive Index is designed to provide exposure to U.S. corporate bonds having the highest quality scores within an eligible universe of U.S. high yield bonds (commonly known as "junk bonds") and bonds with the lowest credit rating considered investment grade.

The Invesco Emerging Markets Debt Defensive Index is designed to provide exposure to emerging markets debt securities with relatively-higher quality characteristics, including relatively higher credit ratings and shorter maturities as compared to the overall market for emerging market sovereign and agency debt.

The Invesco Investment Grade Value Index is designed to provide exposure to higher value, U.S. investment grade bonds. Higher value bonds are characterized as those with higher yields that may provide greater returns in certain markets. In addition, the Index seeks to incorporate securities with relatively-higher quality characteristics, including relatively higher credit ratings and shorter maturities) as compared to the overall market for U.S. investment grade bonds.

The Invesco High Yield Value Index is designed to provide exposure to higher value, U.S. high yield bonds (commonly known as "junk bonds") and bonds with the lowest credit rating considered investment grade.

The Invesco Emerging Markets Debt Value Index is designed to provide exposure to higher value, emerging markets debt securities. Higher value bonds are characterized as those with higher yields that may provide greater returns in certain markets. In addition, the Index seeks to incorporate securities with relatively-higher quality characteristics, including relatively higher credit ratings and shorter maturities (comparatively less time until a bond’s maturity) as compared to the overall market for emerging market sovereign and agency debt.

The Invesco Multi-Factor Core Index is designed to provide multi-factor exposure to fixed income securities. The Index is an index of indexes, comprised of component securities of the following underlying indexes, with corresponding approximate weightings in the Multi-Factor Core Index: (i) Invesco U.S. Fixed Rate 30-Year MBS Index (40% weight); (ii) Invesco Investment Grade Defensive Index (25% weight); (iii) Invesco U.S. Treasury 1-3 Years Index (20% weight); (iv) Invesco U.S. Treasury 10-30 Years Index (10% weight); and (v) Invesco Investment Grade Value Index (5% weight).

The Invesco Multi-Factor Core Plus Index is designed to provide multi-factor exposure to fixed income securities. The Index is an index of indexes, comprised of the following underlying indexes, with corresponding approximate weightings in the Multi-Factor Core Plus Index: (i) Invesco High Yield Defensive Index (30% weight); (ii) Invesco Investment Grade Defensive Index (20% weight); (iii) Invesco U.S. Fixed Rate 30-Year MBS Index (20% weight); (iv) Invesco Investment Grade Value Index (10% weight); (v) Invesco U.S. Treasury 10-30 Years Index (10% weight); (vi) Invesco Emerging Markets Debt Defensive Index (5% weight); and (vii) Invesco Emerging Markets Debt Value Index (5% weight).

The Invesco U.S. Fixed Rate 30-Year MBS Index is designed to provide exposure to mortgage-backed pass-through securities of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation.

The Invesco U.S. Treasury 1-3 Years Index includes U.S dollar-denominated Treasury securities with a maturity from one year up to three years, regardless of call features. The securities must also have at least $1 billion par amount outstanding. The securities included in the Index are market-value weighted.

The Invesco U.S. Treasury 10-30 Years Index includes U.S dollar-denominated Treasury securities with a maturity from ten years up to thirty years, regardless of call features. The securities must also have at least $1 billion par amount outstanding. The securities included in the Index are market-value weighted.

The Markit iBoxx USD Liquid Investment Grade Index is designed to provide a balanced representation of the USD investment grade corporate market.

The Markit iBoxx USD Liquid High Yield Index consists of liquid USD high yield bonds, selected to provide a balanced representation of the broad USD high yield corporate bond universe.

The JP Morgan Emerging Markets Bond Index (EMBI Global) is an unmanaged index that tracks debt securities of emerging markets.

The Bloomberg Barclays U.S. Aggregate Bond Index is an unmanaged index considered representative of the US investment-grade, fixed-rate bond market. An investment cannot be made into an index.

About Risk

There are risks involved with investing in ETFs, including possible loss of money. Shares are not actively managed and are subject to risks similar to those of stocks, including those regarding short selling and margin maintenance requirements. Ordinary brokerage commissions apply. The Fund's return may not match the return of the Underlying Index. The Funds are subject to certain other risks. Please see the current prospectus for more information regarding the risk associated with an investment in the Fund.

Interest rate risk refers to the risk that bond prices generally fall as interest rates rise and vice versa.

An issuer may be unable to meet interest and/or principal payments, thereby causing its instruments to decrease in value and lowering the issuer's credit rating.

Investments focused in a particular industry or sector are subject to greater risk, and are more greatly impacted by market volatility, than more diversified investments.

The Funds are non-diversified and may experience greater volatility than a more diversified investment.

The Funds' use of a representative sampling approach will result in its holding a smaller number of securities than are in the underlying Index, and may be subject to greater volatility.

IHYV, IEMV, IHYD, IEMD
The values of junk bonds fluctuate more than those of high quality bonds and can decline significantly over short time periods.

IEMV, IEMD, IMFP
The risks of investing in securities of foreign issuers, including emerging market issuers, can include fluctuations in foreign currencies, political and economic instability, and foreign taxation issues.

Issuers of sovereign debt or the governmental authorities that control repayment may be unable or unwilling to repay principal or interest when due, and the Fund may have limited recourse in the event of default. Without debt holder approval, some governmental debtors may be able to reschedule or restructure their debt payments or declare moratoria on payments.

IMFC, IMFP
Mortgage- and asset-backed securities, which are subject to call (prepayment) risk, reinvestment risk and extension risk. These securities are also susceptible to an unexpectedly high rate of defaults on the mortgages held by a mortgage pool, which may adversely affect their value. The risk of such defaults depends on the quality of the mortgages underlying such security, the credit quality of its issuer or guarantor, and the nature and structure of its credit support.

Obligations issued by US Government agencies and instrumentalities may receive varying levels of support from the government, which could affect the fund's ability to recover should they default.

The Invesco Investment Grade Defensive Index, Invesco High Yield Defensive Index, Invesco Emerging Markets Debt Defensive Index, Invesco Investment Grade Value Index, Invesco High Yield Value Index, Invesco Multi-Factor Core Index, Invesco Multi-Factor Core Plus Index, Invesco U.S. Fixed Rate 30-Year MBS Index, Invesco U.S. Treasury 1-3 Years Index and Invesco U.S. Treasury 10-30 Years Index are a trademarks of Invesco Indexing LLC (index provider) and has been licensed for use by Invesco Capital Management LLC (investment adviser). Invesco Indexing LLC, Invesco Capital Management LLC, and Invesco Distributors, Inc. (ETF distributor) are wholly owned, indirect subsidiaries of Invesco Ltd.

Note: Not all products are available through all firms.