Invesco High Yield Systematic Bond ETF (GTOQ)

Overview

IHYF employs a factor-based investment strategy that focuses on a systematic approach to selecting securities which the Sub-adviser projects will yield higher returns compared to other fixed income options. The strategy particularly considers quantifiable characteristics of issuers and their associated factors, leading the fund to potentially allocate more resources to categories such as value bonds, low volatility bonds, and high carry bonds. The portfolio managers of IHYF maintain the flexibility to adjust these selected factors in order to effectively manage and minimize specific risks associated with the investments.

In addition to the primary focus on bonds, the fund may diversify its investments by including US Treasurys, Collateralized Debt Obligations (CDOs), distressed bonds, and derivatives, all subjected to predefined limits. Fluctuations in the market may prompt deviations from the fund’s allocation limits, thereby enhancing its adaptability. Importantly, IHYF highlights the strategic incorporation of derivatives, including options, futures, forward contracts, swaps, as well as certain mortgage-related and asset-backed securities. This focus aims to hedge against investment risks, particularly those arising from interest rate changes and foreign currency exposure. IHYF is characterized as a genuinely actively-managed fund, reflecting its commitment to proactive investment strategies.

Products and Services

• Factor-Based Investment Strategy

  IHYF utilizes a systematic process that targets securities believed to generate superior returns based on quantified issuer characteristics. This approach emphasizes the identification and prioritization of various factors to optimize investment decisions.

• Value Bonds

  The fund may allocate a higher proportion of its portfolio to value bonds, which are typically characterized by their discounted price relative to their perceived intrinsic value. By focusing on these instruments, IHYF seeks to capitalize on potential appreciation in value over time.

• Low Volatility Bonds

  Investments in low volatility bonds aim to provide stability and lower risk, catering to investors seeking consistent returns with reduced exposure to market fluctuations. This strategic focus helps mitigate the possibility of large portfolio swings during tumultuous market periods.

• High Carry Bonds

  IHYF selects high carry bonds, which offer significant yields relative to their risk levels. This selection aims to enhance income generation, taking advantage of the higher interest earned from such securities.

• Diversification into US Treasurys and Distressed Bonds

  The fund's investment strategy includes a mix of US Treasurys for reliability and distressed bonds for potential high returns. This diversification helps balance safety with risk in the pursuit of overall portfolio performance.

• Use of Derivatives

  IHYF actively employs derivatives such as options, futures, forward contracts, and swaps. These financial instruments are essential for hedging against risks associated with interest rate fluctuations and foreign currency exposure, aiming to protect the fund's assets and maintain targeted returns.

• Active Management

  This fund embraces a truly active management approach, allowing portfolio managers the leeway to adjust the allocation strategy dynamically based on market conditions and emerging opportunities, thereby seeking to enhance overall investment performance.