Invesco PowerShares announced this week that the PowerShares High Yield Corporate Bond Portfolio (PHB) began tracking the RAFI High Yield Bond Index and was now called the PowerShares Fundamental High Yield Corporate Bond Portfolio.
The ETF previously tracked the WellsFargo High Yield Bond Index. The fund continues to trade on the NYSE Arca under the existing ticker symbol PHB.
Invesco says that PHB is the first fixed-income ETF to use Research Affiliates’ Fundamental Index methodology. Invesco PowerShares already offers eight equity ETFs based on FTSE RAFI indexes, which also rely on Fundamental Index methodology.
“We are very pleased to expand our relationship with Research Affiliates and offer investors another industry first with the introduction of an innovative fixed-income index strategy that incorporates the Fundamental Index methodology,” said Ben Fulton, Invesco PowerShares managing director of global ETFs, in a statement.
Last month, PowerShares updated the names and indexes of five other ETFs.
According to Invesco, traditional bond indices give the largest weights to the biggest debtors, and this may potentially expose investors to greater risks of default.
In contrast, Research Affiliates’ Fundamental Index methodology uses fundamental measures of company size, including book value, sales, dividends and cash flow, to set constituent weights, the ETF provider explains.