Invesco Total Return Bond ETF's GTO experienced team applies a structured and fundamentally driven approach that has delivered strong results over the long haul. The strategy earns a Morningstar Medalist Rating of Bronze.

An experienced group of highly collaborative portfolio managers operates this core-plus bond portfolio. In 2018, the team took over the portfolio through Invesco's acquisition of Guggenheim's exchange-traded fund business, but they’ve delivered a strong track record over a longer period with its open-end counterpart Invesco Core Plus Bond CPBYX. Michael Hyman, the head of global credit strategies, and Matt Brill, the head of North America investment-grade credit, both joined the firm in 2013 from ING (now Voya). In 2018, the firm named Hyman and Brill portfolio managers alongside Chuck Burge, manager of the open-end strategy since 2009. Todd Schomberg, who joined Invesco in 2016 after spending nearly a decade at Voya, was named portfolio manager in February 2021.

Invesco's broad fixed-income resources support this group, including an 11-member investment strategy team that provides guidance on top-down macro views and investment themes. Additionally, the corporate credit and securitized research teams are responsible for conducting bottom-up fundamental research. 

The process integrates the team’s macro views with bottom-up credit research and security selection with nimbleness. The top-down component of the process follows a structured and repeatable approach that considers broad economic and market conditions, occurring over a four-week cycle. The managers combine those cues with an evaluation of the best security ideas proposed by the corporate credit and securitized analysts to construct the portfolio. As such, this portfolio exhibits a bias toward corporate credit, typically representing between 30% and 50% of assets. While the emphasis on corporate credit can weigh this portfolio down during credit selloffs, the team’s consistent and structured approach has elevated the strategy during market recoveries.

In fact, the portfolio's credit focus, as well as its ventures into emerging-markets debt, have led to heightened volatility (as measured by standard deviation), but it has delivered strong long-term performance over the past five years. The ETF’s 1.3% annualized gain from April 2018 (when this team took over) through May 2023 outpaced over 75% of distinct intermediate core-plus bond Morningstar Category peers, and the ETF’s open-end counterpart also sports a strong longer-term track record.

Analyst Rating

Remains a solid option despite recent setbacks.

Analyst

Thomas Murphy

Invesco High Yield Select ETF

The team employs a structured investment approach that delivers a competitive edge over peers. The strategy retains its Above Average Process Pillar rating.

This ETF follows the same overall approach as its open-end counterpart Invesco Core Plus Bond CPBYX, but it typically carries less credit risk. The process integrates the team’s top-down macro views with bottom-up security selection. The managers engage in regular collaboration with the investment strategy team, which includes senior leaders from across the platform. They convene on a weekly basis, and even more frequently during stressed markets, to establish top-down investment themes and determine asset allocations.

The team’s primary objective is to generate alpha through strong security selection by constructing a high-conviction portfolio that incorporates the best security ideas from the different sector teams. The corporate credit and securitized research analysts source security selection ideas through their fundamental credit analysis. Each issuer is assigned an internal rating, and the managers actively engage with the research teams on a regular basis, both formally and informally. This collaboration plays a critical role in guiding buy, sell, and sizing decisions.

Given their background in corporate credit, the managers have a preference for constructing a portfolio that leans toward a higher allocation to credit-sensitive securities. The bulk of the portfolio’s assets are composed of corporate bonds (30%-50% of assets). The team will also allocate to agency and nonagency mortgage-backed securities (10%-30%), emerging-markets debt (5%-10%), and commercial MBS and asset-backed securities (5%-10% each). The portfolio's high-yield exposure has ranged between 5% and 20% of assets. For liquidity reasons, the team typically maintains higher allocations in U.S. Treasuries (15%-30%) compared with the open-end vehicle.

Above Average

Process

The team behind this strategy is experienced and collaborative, drawing on Invesco's robust fixed-income research resources. The strategy earns an Above Average People Pillar rating.

The team took over this ETF through Invesco's acquisition of Guggenheim's ETF business in 2018, and it has a solid long-term track record with the open-end counterpart Invesco Core Plus Bond CPBYX. The strategy is managed by a cohesive team of four portfolio managers who possess extensive experience and foster a collaborative approach. The team's collective background in credit is particularly significant, as it directly contributes to their deep involvement in the security-selection process.

Michael Hyman, portfolio manager and head of global credit strategies, joined Invesco in 2013 following his tenure of over a decade at ING (now Voya). Matt Brill, who worked alongside Hyman at ING, joined Invesco simultaneously in 2013. Brill also assumes the role of overseeing the firm's investment-grade credit efforts. In 2018, the firm named Hyman and Brill portfolio managers alongside Chuck Burge, manager of the open-end strategy since 2009. Todd Schomberg, who joined Invesco in 2016 after spending nearly a decade at Voya, was named portfolio manager in February 2021. 

Brill, Schomberg, and Burge lead the day-to-day operations of the strategy, while Hyman influences the overall process and shapes the portfolio from a high level. The fundamental research support is provided by large and experienced corporate credit and structured investments analyst teams, while the macro views and investment themes are driven by the 11-member investment strategy team.

People

Invesco succeeds in a number of areas but also has its share of subpar offerings, along with many others that land somewhere in the middle. A mid-2023 change of CEO, from longtime chief Marty Flanagan to veteran Invesco executive Andrew Schlossberg, is noteworthy, and several other executives retired or departed in 2023. Portfolio-manager shuffles aimed at bolstering poor performers, which began under Flanagan, have continued under Schlossberg, who told Morningstar his most important aim is bolstering “investment quality.” However, major changes of direction or approach are unlikely. The firm retains a Morningstar Parent rating of Average. 
Invesco’s international-equity teams in Texas and New York remain solid. However, the extensive U.S.-equity lineup needs improvement. Fixed-income offerings run the gamut: The multisector and short-term-bond areas are good, but corporate high-yield is less impressive. The firm’s exchange-traded fund lineup includes the popular Nasdaq-focused QQQ; passive strategies make up around 37% of Invesco’s assets under management. Invesco has not been averse to trying new types of strategies, and it was among the firms that immediately launched a spot bitcoin ETF after SEC approval in early 2024.
The picture outside the United States is mixed. Fund performance has been subpar in Asia, and while the picture has brightened in the United Kingdom and Europe, that region still can’t be considered a strength.

Average

Parent

Invesco Total Return Bond ETF

GTO is an actively managed fund with the ability to invest in any number of fixed income securities with varying credit ratings, countries, and durations.

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PCB Bancorp.

As the broad economy and the equity markets continue to heal in 2021, investors should not forget about bond exposure. Whether it's for income or safe haven purposes, bond ETFs from Invesco offer attractive options.

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I am certainly not in the business of predicting interest rate movement.

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Getting complete bond exposure doesn't mean investors have to sift through the vast array of bonds in the debt market. An active management strategy allows ETF investors to get total bond exposure in one fund via the Invesco Total Return Bond ETF (GTO), which does all the work for them.

News for Invesco Total Return Bond ETF ETF (GTO)