A sound investment process and strong management team underpin Invesco Short Duration Bond ETF's Morningstar Medalist Rating of Bronze. The portfolio maintains a cost advantage over competitors, priced within the lowest fee quintile among peers.  

 The strategy merits an Above Average Process Pillar rating. The strategy’s management team earns an Above Average People Pillar rating. The strategy's parent organization earns the firm an Average Parent Pillar rating. People, Process and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

The team employs a structured investment approach that has a competitive edge over their peers, retaining its Above Average Process Pillar rating.
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 construct a portfolio that leans towards large helpings of credit-sensitive securities. The bulk of the portfolio’s assets are comprised of corporate bonds (50% to 70%). Given the managers’ opportunity set which focuses on the short end of the yield curve, they typically allocate to nonagency mortgages (5% to 15%), asset-backed securities (5% to 10%), and commercial MBS (5% to 10%). The portfolio’s high-yield exposure typically sits between 5% to 10%, placing it on the credit-heavy side of the short-term bond category.

Note: The Process Pillar rating and analysis are indirectly assigned by an analyst. When an analyst covers a vehicle that follows a given strategy (as codified by Morningstar’s StrategyID data point) Morningstar maps the covered vehicle’s Process Pillar to any other uncovered vehicles that follow the same strategy (that is, share the same StrategyID). This ensures that the analyst’s view is leveraged whenever available and promotes consistency when assigning Process Pillar ratings to vehicles that follow the same strategy.

Above Average

Process

The team boasts experience and emphasizes collaboration. The strategy earns an Above Average People Pillar rating.  
Following Invesco’s acquisition of Oppenheimer in 2019, Michael Hyman, Invesco’s head of global credit strategies, was named portfolio manager on Invesco Oppenheimer Limited Term Bond to help transition those assets into this strategy. The two funds merged in May 2020, and the former lead manager on the defunct Oppenheimer vehicle left the firm at the end of 2019.
This 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.
The fund has four listed portfolio managers: Matt Brill, Todd Schomberg, and Chuck Burge lead the day-to-day operations of the strategy while Hyman influences the overall process and shapes the portfolio from a high level. Hyman and Brill joined Invesco simultaneously in 2013 after working together at ING (now Voya).
A 31-member corporate credit research team and a 10-person securitized analyst group support the fundamental research and security selection efforts. The investment strategy team, a group consisting of senior leaders across the fixed-income platform, guides top-down portfolio positioning through their macro views and insights.

Note: The People Pillar rating and analysis are indirectly assigned by an analyst. When an analyst covers a vehicle that follows a given strategy (as codified by Morningstar’s StrategyID data point), Morningstar maps the covered vehicle’s People Pillar ratings to any other uncovered vehicles that follow the same strategy (that is, share the same StrategyID). This ensures that the analyst’s view is leveraged whenever available and promotes consistency when assigning People Pillar ratings to vehicles that follow the same strategy.

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 Short Duration Bond ETF

ISBD is an actively managed fund that holds various fixed income securities of any rating while maintaining a portfolio maturity and duration between one and three years.

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