The combination of an Average People Pillar rating and a Below Average Process Pillar rating limit  Invesco Fdmtl Invmt Grd Corp Bd ETF to a Morningstar Medalist Rating of Neutral.  The portfolio maintains a cost advantage over competitors, priced within the cheapest fee quintile among peers.  

 The strategy receives a Below Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant overweight position in corporate bonds and A rated bonds compared with category peers. The strategy’s management team earns an Average People Pillar rating. The strategy's parent organization earns the firm an Average Parent Pillar rating. People Pillar 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

Morningstar's evaluation of this fund's process seeks to determine how repeatable, consistent, and reliable it is, and whether management maintains a competitive advantage. Invesco Fdmtl Invmt Grd Corp Bd ETF earns a Below Average Process Pillar rating.    The process benefits from tracking an index. Historical data, such as Morningstar's Active/Passive Barometer, finds that passively managed funds have generally outperformed their active counterparts, especially over longer time horizons. However, the rating is held back by the parent firm's five-year risk-adjusted success ratio of 42%. The measure indicates the percentage of a firm's funds that survived and beat their respective category's median Morningstar Risk-Adjusted Return for the period. The parent's subpar success ratio suggests that the firm could do better across its fund lineup. The parent firm's disappointing risk-adjusted performance, as shown by its average 10-year Morningstar Rating of 2.8 stars, also holds the rating back. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis.

 Compared with other funds in the Corporate Bond Morningstar Category, this fund, historically, hews closely to peers' credit and interest-rate sensitivity over the past few years. Opening the analysis to additional factors, the portfolio has displayed biases over time, whether towards or away from certain fixed-income instruments. Relative to the average strategy in the category, the managers have been meaningfully overweight corporate bonds in recent years. In the latest month, the strategy has relatively overweighted corporate bonds compared with its peers as well. Additionally, there's been a notable overallocation to A rated bonds over the past few years. Compared with category peers, the strategy had more exposure to A rated bonds in the most recent month. Finally, during the past few years, the fund leaned meaningfully away from debt with 10- to 15-year maturities. In recent months, the strategy also had less exposure to debt with 10- to 15-year maturities compared to its peers.

 This strategy's 12-month yield is 3.7%, lower than its average peers' 4.2%. In addition, it has a 4.9% 30-day SEC yield (a measure similar to yield-to-maturity). Typically, a lower yield comes with the benefit of less credit risk. But that isn't always the case. Over the past 12 months, the average yield of the fund has been lower than the average yield of its Morningstar Category peers. The portfolio's average surveyed credit quality is on par with peers, with both the fund and the average being rated BBB.

Below Average

Process

Invesco’s  team is comparable to peers, resulting in an Average People Pillar rating. There’s a deep bench of five managers listed on the fund. Though they do not manage other products together, managers may manage them individually.  

 Note: This People Pillar rating is indirectly assigned by an analyst. Morningstar analysts evaluate the People Pillar for passive products at the brand level and may also differentiate by asset class. There is at least one other passive strategy at the firm that is covered by a Morningstar analyst, so the People Pillar rating of the fund is inherited from the rating that the Morningstar analyst assigned to investment vehicles under the same brand name.

Average

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.

Parent

Invesco Fundamental Investment Grade Corporate Bond ETF

PFIG tracks a fundamental-weighted index of investment-grade corporate bonds available in US markets. Issues are selected and weighted using RAFI scores based on financial statement metrics.

PIMCO Investment Grade Corporate Bond ETF

Aptus Defined Risk ETF

Fidelity Corporate Bond ETF

Franklin Investment Grade Corporate ETF

Goldman Sachs Access Investment Grade Corporate Bond ETF

Inspire Corporate Bond Impact ETF

Principal Investment Grade Corporate Active ETF

iShares Interest Rate Hedged Long-Term Corporate Bond ETF

iShares Investment Grade Bond Factor ETF

iShares 5-10 Year Investment Grade Corporate Bond ETF

John Hancock Corporate Bond ETF

American Century Diversified Corporate Bond ETF

FlexShares Credit-Scored US Long Corporate Bond Index Fund

iShares iBoxx $ Investment Grade Corporate Bond ETF

iShares BBB Rated Corporate Bond ETF

iShares Interest Rate Hedged Corporate Bond ETF

iShares Inflation Hedged Corporate Bond ETF

Mobeus Income & Growth 2 VCT PLC

iShares Aaa-A Rated Corporate Bond ETF

Schwab 5-10 Year Corporate Bond ETF

FlexShares Credit-Scored US Corporate Bond Index Fund

SPDR Portfolio Corporate Bond

M&A was almost dormant in 2023. In the US, as a proportion of the market value of the benchmark equity indices, it fell to its lowest level in 20 years, according to McKinsey. Credit investors are not traditionally supposed to be fans of M&A, and it's true we are wary of leveraging M&A, where debt is loaded onto balance sheets to buy competitors. We are seeing a comeback for M&A that we think is likely to continue through 2024.

The Credit Opportunity In M&A

Many investors and advisors believe investment-grade U.S. corporate bonds should hold a core position in long-term, buy-and-hold portfolios.  This asset class has the potential to offer a significant yield upgrade from Treasuries without exposing investors to the risk that often accompanies high yield bonds.

PFIG Deserves a Core Position in Long-Term Portfolios

The Invesco Fundamental Investment Grade Corporate Bond ETF has hit a fresh 52-week high. Are more gains in store?

Corporate Bond ETF (PFIG) Hits New 52-Week High

News for Invesco Fundamental Investment Grade Corporate Bond ETF ETF (PFIG)