Invesco launches fixed income ETFs

Invesco launches fixed income ETFs

Invesco has launched three new ETFs in the fixed income space, to meet demand among European investors.

The three funds are a USD Corporate Bond Ucits ETF, a Euro Corporate Bond Ucits ETF and an Emerging Market USD Bond Ucits ETF.

All are under the PowerShares brand.

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The USD Corporate Bond ETF tracks the Bloomberg Barclays USD Investment Grade Corporate Liquidity Screened Bond index.

The average yield to maturity of underlying assets is 3.11 per cent, with the average rating A minus.

The fee on the ETF is 0.16 per cent.

The Euro Corporate Bond ETF tracks the Bloomberg Barclays Euro Corporate index, which also has a 0.16 per cent fee. 

The average rating of underlying assets is A minus, with industrials accounting for just over half of the sector allocation, and a yield to maturity of 0.61 per cent.

The PowerShares Emerging Markets USD Bond Ucits ETF tracks the Bloomberg Barclays Emerging Markets USD Sovereign Bond index and has a fee of 0.35 per cent.

The average rating of underlying assets is BB plus, with a yield to maturity of 4.87 per cent.

The top five country holdings are Argentina, Indonesia, Turkey, Mexico and Saudi Arabia.

Paul Syms, head of fixed income product management at Invesco PowerShares, said fixed income was particularly popular at present.

He said: “While the many benefits of ETFs are well known to equity investors, the focus continues to shift towards the fixed income space.

"There is clear and strong demand from investors for low cost, simple, transparent and well-structured fixed income solutions.”

Trystan Lewis, Chartered Financial Planner of Griffin Wealth Management in Chester, said while fixed income was part of a diversified portfolio, it did tend to have an inverse correlation with rising interest rates.

He said: "We're unlikely to see the stellar returns that we have in recent years."

He added that, post the Brexit vote, his firm was looking more globally for fixed income returns.

He said: "We have to look at fixed income globally. But it is definitely something that needs to be in the mix, particularly for those in retirement."