The Wheaton, Il.-based investment firm changed both the name and the index for PowerShares High Yield Corporate Bond Portfolio (PHB).
The ETF was renamed the PowerShares Fundamental High Yield Corporate Bond Portfolio, and its underlying index was switched to the RAFI High Yield Bond Index.
The changes became effective on August 2.
PHB is the first fixed-income ETF to use Research Affiliates’ Fundamental Index methodology.
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Traditional bond indexes give the largest weights to the biggest debtors, potentially exposing 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, according to PowerShares.